Since the video file is larger than the editing window
That is not normal. Can you elaborate?
Sure. I had captured the video at HDV1080i, which has a frame size of 1440x1080. Due to the crookedness issue, I created a new project, this one with a frame size of 720x480, imported the captured video files and scaled the video down to 54%.
Try working in the correct HD sequence, and upscaling the video by 2% or so, enough to get rid of the black.