I am not sure why auto switching is not working in pre-recorded DVDs if they are widescreen.
However, this would not work in any case for DVDs recorded via the Liteon for the following reasons:
Alll DVDs have some information files (called IFO files). These tell the player if a recording is 16:9 or 4:3. When you set the recorder to 16:9, you are telling it to play back the recording on a widescreen TV.
What happnes then if the DVD is marked as 16:9, it is shown in full widescreen. If the DVD is marked as 4:3 the recording is played back with vertical black bars either side of the 4:3 picture.
However, the Liteon has a limitation as it assumes all recordings are 4:3 as it is essentially an analogue recording device (even Scart is analogue). This is basically a limitation of the Lieton.
It doesn’t know that the external source is a 16:9 source. The recording is fine, but you have to manually switch your TV to 16:9, as the recorder thinks its 4:3.
It is possible using IFOEDIT (search for other posts by me) to edit the IFO file and tell it the recording is 16:9, but you need to do this on a PC which takes a while and mostly would not be worth the effort (especially as auto switching is not working in your case anyway).