When you use the composite (red/white/yellow) or S-video outputs, the format button does nothing. Format button only affects the HD outputs (component or HDMI). Your TV does have a component input, but it is not HD and is capable of 480i only. If you want your screen full as much as possible, you need to go into the receiver menu, under HDTV, make sure the TV ratio is set to 4:3, and under Video set Native to Off, and Screen Format set it to Crop. This will prevent most if not all black bars (pillar and letterbox) from showing up (but at the expense of chopping part of the top and bottom). If you see pillarboxing on a 4:3 screen, the image is actually being squashed by the receiver. This is how I have my SDTV set up and it isn't too bad. The only way to make everything display properly is to upgrade to a 16:9 (widescreen) HDTV.
But remember, as charper said, 'properly' on an HDTV does sometimes mean there will be bars. If the program was not shot in widescreen HD, there will be pillars. If it is a movie playing in its 'original aspect ratio' there will be letterboxing (theater screens are 30% wider than a widescreen TV). Call me a purist, but stretching a pillarbox program into a widescreen is blasphemy. I would rather there be pillars, but I'll deal with cropping before I'd stretch it.