I have the same problem going to iPod. Here's the deal and I hope Roxio fixes this.
My Video recorder has a widescreen mode that really just records a letterbox format in 4:3 format. On an iPod, you can switch Widescreen modes (On/Off) and basically "ZOOM/CROP" a widescreen movie to 4:3 and fill the iPod screen with Widescreen Off. To use this feature you have to have a widescreen format like 640x272. (Cinemascope).
Here's the defect bit, when Popcorn 2 is encoding, it retains the movie's format 640x272 but is changing the image aspect ratio to 4:3. This squeezes the image leaving black bars on left and right.
This creates a useless file.
Roxio, please preserve the movie size and aspect ratio when encoding files. It should solve the problem for everyone.