jAlbum does not process anamorphic videos correctly. I posted a bug report about this a while back, when I first discovered it, but the problem hasn't been addressed. Happily, the workaround is not particularly difficult.
What is an anamorphic video? Well, you can Google it if you want to be thoroughly confused. But there's a simple test. With jAlbum video support enabled, add a video to your album project. If the thumbnail looks "squished," you have an anamorphic video.
If the thumbnail looks normal, you don't have an anamorphic video, and you can stop reading this thread right now.
jAlbum will encode the video, and it might even look OK when it plays back within the album. However, the thumbnail will remain squished, and the video "frame" around the video will probably be the wrong size, yielding black bars at top and bottom. This happens because the player script being used by the skin understands an anamorphic video, but jAlbum itself is confused about its dimensions.
Select a destination for the output (some directory other than your source directory, to prevent problems).
Choose Web optimized (which will put the index at the beginning of the file to enable streaming), Anamorphic: None, Modulus: 2, and Keep Aspect Ratio, then click Start.
When it's finished, you will have a corrected MP4 that you can then add to your album project.
You can tell jAlbum not to re-encode the video (right-click on its thumbnail, and look for that option), but I recommend letting jAlbum re-encode it. The Handbrake process doesn't cut the file down to a web-friendly size, whereas jAlbum will.
Handbrake will not reduce the dimensions of the video, either, and in its native size it will probably be too large for most laptops. How you address this will depend upon the skin you're using. Some skins let you specify the frame dimensions you want. The dimensions displayed within Handbrake will tell you how large the video is (1440 by 810 in the example above), so you can specify fixed bounds for the video frame in the same aspect ratio (divide both width and height by two, for example). Other skins automatically limit the frame size to the same dimensions as the image bounds you've specified for the album.
If you have an entire collection of videos like this, Handbrake can batch-process them. Plant all of them in a directory somewhere. Then, in Handbrake, open the entire folder. Set the options I've outlined above, click the little down-arrow next to Add to Queue, and choose Add All. Then hit Start, and go make yourself a cup of tea while it grinds through all of them.