It sounds like you are watching TV on the input your VCR goes to. In that case, that would explain why:
1) you are getting black bars
2) you can't adjust the picture size
3) you have to turn the VCR on.
The svideo cord should be hooked from the 811 to the vcr, but only for the purposes of recording/playing back something you taped.
You need to switch your TV to the component input to benefit from the 811, without doing that, everything will be in SD. All the issues you mentioned are from you watching over the non-HD outputs.