Xbox 360 and windows media center extender showing wrong aspect ratio while playing composite video

Recently I have installed Media Center server as centralized location for all of my media files including broadcast and satellite TV. I was able to view or play the media by using Xbox 360 as a Media Center extenders. The setup is running great across the network.
Any item which I have recorded on composite video input of TV tuner card in Media Center server are in the 4:3 aspect ratio when I watching them through Xbox. If I am watching recordings directly on Media Center server and they are into the 16:9 format. The gaming console of mine is putting black lines either side of the pictures. Same thing is getting happen while watching the live TV from the composite video input.
However Digital TV input is working fine.

If you have recorded the video into 4:3 aspect ratio then black lines are supposed to appear on the Xbox and by using normal media center and it is the correct aspect ratio. In case PC media center is displaying the 4:3 aspect videos in 16:9 without having no black border then there is no issue with the Xbox. The issue is associated with the PC media center which is not configured appropriately.

Thanks a lot for answering. I would like to clarify something which will be helpful to understand the thing. composite video output from the satellite set-top box is of 16:9 aspect ratio. There is no issue when I plug with the wide screen. When recorded files are played on media center directly and still there is no issue. Media Center server has widescreen which has been connected through HDMI. It is getting happen when I play the same through same recording through Xbox but I can I see the same issue.

Ok now I got the idea what you wanted to say over here. I am suspecting that display detection is not enabled on Xbox 360 which under the display settings. So see that and see whether you are able to resolve the issue. if you have set the Xbox to widescreen mode then there will be an issue with extender settings on PC side. What was the output when you have tried video files across the network through windows media sharing and see whether you are able to play the same through aspect ratio.

By using Windows Media Center you can configure the zoom setting when watching TV on the computer monitor of yours. right now I am having WMC which is configured to display 4:3 which was zoomed correctly for OAR.
I think there is need of 4:3 OAR for 4:3 recordings which you have done through your composite input on the TV card. if windows is 16:9 then it will mean 4:3 full-height but with black bars on left and right.