Icewind Dale 2 is originally a 4:3 game (running in a 800x600 resolution), so if you see black borders on the sides on a widescreen (16:9) monitor, then you see the game correctly. If you didn't see the black side borders, then you'd be most probably looking at a distorted, vertically stretched image of the game.
There may be some fan made mods to make the game widescreen (unstretched) using 16:9 resolutions like 1280x768 or 1920x1080, I am not sure, but I am currently happily playing IWD2 as it is intended, with black borders on the sides at the original 800x600 resolution.
Courier84: hi, if I do as suggested I can get to a tab marked "display properties" but clicking on that gives me no scale adjustment for the overall screen size just scales up the icons. I can adjust resolution but again no change from 4:3 format
If I recall correctly, quite often the graphics drivers don't offer the aspect ratio options, UNLESS you are in a different (in this case 4:3) resolution.
So, first change your desktop resolution to e.g. 1024x768, and then check if you see an option in your graphics driver setting to keep (or not keep) the correct aspect ratio. Then change your desktop resolution back to whatever your display's native resolution is (quite often 1920x1080).
But as said, I think you should play the game with the black side borders because then the game is displayed correctly on your widescreen monitor. You don't want to play the game stretched, do you? Do you? Come on! Think of the children, you wouldn't stretch them too, would you?