Even if the image quality looks fine in the iDVD window, this issue can occur. This happens because iDVD has burned your disc at a standard definition and your HDTV or monitor has expanded it. The standard DVD definition used by iDVD is 720 X 480--smaller than most HDTVs and monitors. If you choose to view the video at full screen, the image will appear distorted.
To help with this issue, change the resolution of your HDTV or monitor to match the resolution of the DVD being played or choose to watch the DVD at its native resolution (do not stretch to fill the screen).