Try changing your tv settings you may of accidentley change it (usually your size button on remote).
Don't really use the 360 as a dvd player, but it could just be that the WSS info isn't transmitted in 480p but is in 720p (my dvd player does this) so your TV thinks it's a 4:3 picture. And why switch down from 720p to 480p anyway? Look at the movie - are people tall and stretched (if so you'll need to manually switch aspect ratio) or is it the correct proportions just with bars on all sides (in which case ensure widescreen not 4:3 letterbox on the 360 TV settings).