That's because your full-screen resolution is set to something the client doesn't like, or your desktop resolution doesn't agree with it. Best bet is to try different resolutions until you find one that works and doesn't look distorted. Remember, EQ is a 4:3 aspect ratio.
You'll want to make the changes in your eqclient.ini file, not while in-game. Just search for [VideoMode] and you'll see the appropriate lines.
-Mcoy
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