Hi there, Im new here and to windows 7. Im just rporting that I have ther same problem as waltswife. I will try the HP link to solve mine as well, since I got HP notebook. But I must say, its very odd. Is that problem related to HP or windows 7?
I realize this is an old thread, however, I think the problem is the fact that your resolution is set to 1600x900 and the photo you're using was saved at 600x450, so no matter what setting, fit,full, stretch, it will still come out centered and the more you stretch the more distorted it will be.
Has very little if nothing to do with Win 7 or your graphics card.
Try getting another picture of a resolution size no smaller than 1024x768