From my own personal experience, if you're running the component cables through an audio receiver instead of directly into the tv, it may further distort the picture settings. I've yet to figure out why this is happening to me, and I'm fairly adept at these things. My audio receiver and plasma tv have multiple ports for hdmi, component, etc. My PS3, satellite, dvd player, all work great HDMI, but unless I hook the wii component cable directly to the tv, it's crap. I don't know if that will help or not, or whether your particular brand is plasma or LCD. That could make difference too. LCD is a little more sensitive to the pixel number on widescreen settings, it seems. I get motion sickness watching anything less than 720p on a large LCD tv, hence my decision to go with plasma. Just theorizing there though. I've not hooked up my Wii to LCD to know for sure.
As for the audio receiver issue, if that IS a culprit, I got around it by hooking the component cables up to the tv direct, save the audio cables. I just run them through the audio receiver alone to get surround sound with a better Wii picture.
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