Davinci Resolve - Blanking Fill is not expanding to the size of the video
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With the new information you've provided, I can tell that you're encountering a bug related to Resolve's handling of transparency information in .PNG files.  I can also recommend a solution. 

In your screenshot of the Deliver page, I can tell that there are three clips on your timeline, and that one of them is a .PNG.  In the course of its development, Resolve has suffered growing pains with its treatment of alpha channels, and how video tracks on the timeline treat them.  In fact, there's a recent SE question which was asked within hours of yours which you will find instructive.  See here.

In previous versions of Resolve, dragging a video or still image which contained alpha channel information onto a "foreground" timeline track (any track above your background) was not enough to show the background through the foreground.  You would see black where you should see transparency.  The reason for this behavior was connected to the order of operations in the image processing pipeline, and the fact that color page operations occured before edit and deliver, even if you had not performed any color page operations.  So, unless you added an alpha output node on the color page by right-clicking on the background and selecting "add alpha output," You would see black instead of transparent.

Needless to say, this behavior frustrated new users, and BlackMagic Design strove to improve the behavior of images with alpha channels, out of the box.  Now, when you drop a .PNG with transparency over another timeline layer, the color page is "smart enough" to realize that it should show you the cutout image composited over the background on the edit page without requiring you to do any extra work.

However, as you have discovered, there is a bug in the software where dropping a .PNG over a layer-with-effects, incorrectly renders the effects.  This is an internal order of operations compositing error, but the good news is you can force the compositing operations to execute in the proper order.  

TLDR: To fix your problem, right-click on the V1 clip in the timeline, and choose "New Compound Clip" from the top of the contextual menu.  You'll now see the full blurred background of the Blanking Fill operation.

Compound Clips in Resolve are like folders in a file system, in a way.  Your original clip is now contained within a larger structure.  You'll notice that if you click on the new Compound Clip in the timeline that it appears as if the blanking fill controls have disappeared from the inspector, even though the blanking fill effect is still clearly visible.  Fear not, the controls are still available, and editable.  Just right-click on the Compound Clip, and select "Open in timeline" from the contextual menu.  This takes you inside of the "folder" where you can see your original clip and adjust its controls.  To get back out to your main timeline, double-click on the timeline name at the BOTTOM of the screen in the "breadcrumb" list, where, it will say "Timeline 1 > Compound Clip 1."

Besides the folder analogy to describe Compound clips, you can also think of them as a set of parenthesis in an algebraic equation; they affect the order of operations in Resolve, and help control which effects are composited before others.  In your case, they'll ensure that the blanking fill gets calculated fully before the .PNG is placed in the foreground.

Bonus:  Here's one more quirk about working with compound clips that you should know about.  In Resolve, it's easy to break apart a compound clip onto the timeline and restore its constituent parts (CC's can contain multiple clips and layers, like a mini timeline).  To do this, just right-click on a compound clip in the timeline, and select "Decompose in place" from the contextual menu (This is a feature which separates Resolve from Premiere, btw, where it's much more difficult to break apart a nested sequence).  So, compound clips are a very handy container for a group of clips, and you can, e.g. apply color page effects to the container as a whole.  That is, if you lasso a hundred clips on a timeline, and turn them into a CC, you could turn them all blue with one node on the color page.  

Here's the quirk:  If you decompose this string of 100 blue clips on the timeline, you are ERASING both the container, and all of the effects applied to the container.  The clips will no longer be blue.  The color page effects do not cascade to constituent elements when you "decompose in place."  So, as a rule of thumb, if you're ever going to "flatten" your timeline (for .xml round-tripping to another app, for instance), FLATTEN IT BEFORE YOU COLOR IT.

Hope this helps,

* End Edit. Previous answer below. *

It's hard to know without knowing what your settings are.  If your timeline resolution has square dimensions, and you don't have "Use gray background in viewers" checked, then the black vertical bars could just be the bounds of your timeline.  It's also possible that you have output blanking turned on under timeline->output blanking, which would add black bars over the fuzzy bars.  Also, make sure your viewer window is scaled to "fit" inside the UI.  Here are some screenshots of my settings if that helps. Oh, and make sure you're not cropping the edges, by checking the crop slider values, which should be zero.