The way the DXR3 outputs the final video can be set here. The individual values are:
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letterboxed tv
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Send video to the TV out connector only. This is the mode used for the standard 4:3 television set. Anamorphic (16:9) video will be displayed letterboxed, pan&scan material will have the image cropped at the left and right side. This is the common setting for TV viewing and acts like a standalone DVD player.
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widescreen tv
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Send video to the tv out connector only. This mode is intended for 16:9 widescreen TV sets. Anamorphic and pan&scan content will fill the entire screen, but you have to set the TV's aspect ratio manually to 16:9 using your.
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letterboxed overlay
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Overlay Video output on the computer screen with the option of on-the-fly switching to TV out by hiding the video window. The overlay will be displayed with black borders if it is anamorphic (16:9).
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This setting is only useful in the rare case of a DVD subtitle channel that would only display properly in letterbox mode. A good example for that are the animated commentator's silhouettes on "Ghostbusters".
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widescreen overlay
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Overlay Video output on the computer screen with the option of on-the-fly switching to TV out by hiding the video window. This is the common variant of DXR3 overlay.