Here's the best explanation I've seen on this set, with lots of good illustrative graphics:
House DVD news: Difference between Widescreen and Anamorphic Widescreen (with studio statement) | TVShowsOnDVD.com
It's a shame Universal couldn't be bothered to do this correctly, supposedly due to "tight schedule," an excuse that seems to get trotted out every time there are customer complaints about a product. So apparently it's our insatiable appetite for new releases that causes Universal to mess up a setting when mastering DVDs. Um. Yeah.
I'm sure this is not the last time the question will come up, especially with the coming switchover to all-digital and many people replacing their current 4:3 sets with digital-tuner widescreen sets. A lot of people are going to have a "Hey, what the...." moment when they first try playing this on their new widescreen TV.
Dave, if it's any consolation, I believe this was fixed for seasons 2 and 3, but to my knowledge they've never fixed it in S1 nor offered replacement discs.