Thanks Cmdr and dkeeton for your suggestions and I'm really sorry this came late, I was out of town so I couldn't test it out. Cmdr - I appreciate your encouragement too and it's surely my plan to smash RA2 once I get this damn problem sorted out heh.
I haven't downloaded the stuff that Cmdr suggested yet, will do soon, in the meantime I'll answer dkeeton first that yes, I've checked many times that compatibility is completely disabled for all 4 executables, game.exe and gamemd.exe included.
I also observed something new: after completely uninstalling everything (with not a single file left) and reinstalling, merely copying and pasting the [Video] settings which dkeeton said does not produce black bars, does not remove the black bars when the game is run. The black bars only go away when I run the CncNet client and select TS-DDRAW, but doing that removes the sound from the game. What I'm saying is, changes to the game renderer can only be done by running CncNet instead of modifying the .ini files. Might this be a clue to solving the problem somehow?