kellryth09 , is your player 1.5" or 1.8"? Usually, the 1.8" would play in landscape mode while the 1.5" would play in portrait mode. In portrait mode, there would be top and bottom bars that the video is unable cover, it's to preserve the aspect ratio.
You might like to read up on the VirtualDub thread tutorial by Tadad1
Here. It covers additional steps that you can use to improve the video images.
Regarding the FM "hard error", there are 2 possibilities. It is either there is physically no FM chip inside, or there is an FM chip inside but it is damaged. If you bought the player with FM stated as specifications, i'll suggest you contact your seller regarding this.