I'm new to the forum and came here exploring this very same question. I just switched from DirecTV to TWC (by force, believe me). I had regular satellite at the old place and decided to upgrade to HD when I got the cable here.
The issue IS the box. I'll tell you why. Your old box was expecting a normal TV so it broadcast a normal 4:3 picture that your TV then stretched to fill the screen. The nice thing about this setup is that your TV probably has a "Full Screen" mode (or something similar) that stretches the sides more than the center so the picture in the middle of the screen looks near perfect and you barely even notice the stretching.
Now you have HD and your box is probably set to 16:9 picture output rather than 4:3. Unfortunately the box adds in the gray side bars for the 4:3 picture rather than just broadcasting it as is. When you try to use the "Full Screen" on your TV the side bars are included in the picture that the TV is trying to adjust...you can't get rid of them. Maybe the box manufacturers feel that the black screen on your TV is too bland and gray side bars will remind you why you pay for HD programming and force you to stop watching 4:3??
The box only has the stretch or zoom options to fix this issue. It doesn't have the "full screen" output which is 1,000X better than the stretch and/or zoom options. This is why your current picture, when stretched, looks horrible.
Believe me - I feel your pain. How does one contact star america with this feedback?