QUOTE (Advanced Intellect)
This TV was rated the best Plasma HDTV by CNET and it has a 1024 x 720 Resolution and HDTV resolutions supported 480i, 480p, 720p, 1080i, 1080p.
It may
support them by downscaling (and therefore look pants), but it won't display them at their native resolution.
How you you think a 1080 picture (1080 horizontal lines) is going to fit on your 768/720 (you've quoted two different resolutions now) (768/720 horizontal lines) display?
Aaaaaaaanyway, back to the original question, the reason your xbox picture looks poo is because your xbox outputs 525 horizonal lines (IIRC), your display then has to double up on pixels to make it 768/720 lines (this is why it looks "big" since it has to nearly double the size of everything), most displays do a reasonable good job of this when there isn't a lot of detail/movement in the picture, if there's a lot of movement or detail in the picture (say rain, or video of the sea) then it starts to look like a blocky mess because the upscaler can't keep up.
The reason for the picture being squashed is because either; the panel has wide spacings on the horizontal pixels (I haven't seen the display so can't say), or your xbox is outputting at 4:3 rather than 16:9.
The only way to get a decent picture would be to get an xbox360, but even then pictures will still look messy due to your panel having to scale the images with it not being a native hi-def panel (unless it's a 720 panel, which isn't what you quoted in your original post).
I *think* (but don't quote me on this because I haven't done extensive reasearch into them) your panel is an EDTV panel which accepts HDTV signals via downscaling.
Edit: you know what, your panel might be classed as high-def over there, I'm not sure what your standards are, however, over here (and most of the world IIRC) if a panel can't display 720 or 1080 at its native resolution it can't be classed as a HDTV display, that's why a lot of products have recently been stripped of their HDTV 'status'.