Tony,
USB drives are simply NG for video editing — they do not have the necessary sustained throughput. You can use them for backups, but they simply are not good enough for editing.
As far as your other question, if your material is anamorphic DV and your timeline settings are set properly to match, you should be viewing full-frame widescreen 16×9 without the “letterbox” on top and bottom.
Meanwhile, I have two tips for you that I hope you”ll follow…
1. Please watch this short tutorial and follow it religiously when setting up new projects in FCP and you will never have problems again. https://library.creativecow.net/articles/biscardi_walter/realtime_sequences.php
2. Brush up on editing terminology and learn all the terms such as anamorphic, letterbox, pillarbox, etc., etc., etc. Knowing these terms will help you considerably here on the Cow and in the real world when talking video, and you will become a professional much faster if you can talk the talk.
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles
POST-PRODUCTION WITHOUT THE USUAL INSANITY ™
A forum host of Creative COW’s Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.