I believe the ovescan is the the filling up the display on my first screenshot.
He's probably not getting a sharp picture because the TV is cropping the input, and he underscanned to compensate for this (to fill his screen). This causes image distortion and lost screen information. A properly configured HD screen should not need the video adapter to underscan (unless the screen's overscan could not be switched off).
As for selecting between YCbCr 4:4:4 and RGB, there are advantages and disadvantages. If the display supports YCbCr 4:4:4, then it's a good choice as current Nvidia and AMD consumer graphics adapters can output processed video in deep color through this pixel format (you need their pro models if you want to do this using RGB). If the screen does not support 4:4:4, then some color information will be lost and the picture will look a lot "rougher" to the naked eye -- in such cases, RGB is the preferable format.
Current Samsungs and Sonys almost always support 4:4:4. LGs and Sharps are a mixed bag, while Panasonics generally do not.
The thing is that many TVs may need a trick or two to enable 4:4:4. For Samsungs, it may require the renaming of the input for example.