Diagnosis
The auto keystone correction is getting confused, usually because it's trying to correct for a surface that isn't a flat, white screen, or because the projector isn't close to level.
How to Fix It
The best fix is often to turn auto keystone off and do it manually. Here's how: 1) Press the 'Menu' button on the remote. 2) Go to 'Picture' > 'Aspect Ratio & Keystone'. 3) Find 'Auto Keystone' and set it to OFF. Now you're in control. Go to 'Manual Keystone'. Use the arrow buttons on the remote to adjust the vertical and horizontal sliders until the sides of the image look perfectly straight and rectangular. It helps to pull up a test pattern (like the grid from the projector's built-in screen adjustment menu) to see the lines clearly.
If That Didn't Work
If adjustments seem extreme or can't get the picture square, the physical placement is too far off. The projector should be as level as possible (use a small bubble level on top) and positioned so the lens is roughly perpendicular to the center of your screen or wall. Adjust the projector's position or use the adjustable feet before you use digital keystone. Digital keystone degrades picture quality the more you use it.
Heads Up
For the best picture quality, avoid keystone correction altogether. Take the time to physically mount or place the projector so the lens is square to the screen. Use the lens shift dials (the little wheels near the lens) for fine-tuning instead—that's an optical adjustment that doesn't hurt the image.