SH3 doesn't handle the bigger resolutions and widescreen aspect ratio's wel. Try setting your screen resolution differently, or perhaps your video driver has a scaling option to scale (the usually default resolution 1024x768) up to whatever your driver can handle.
There are also some fixed directx dll mods that circumvent the resolution issue but it has some restrictions in use, like screendumps and userinterfaces of mods that do not look right. I never used it so I can't help further here.
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