The best looking SD channels on Shaw Direct are Discovery and TSN.
When using HDMI, press the INFO button on your TV remote to find out the input resolution. I found on my 505 that the best mode was "passthrough". The receiver did no scaling at all, and just passed the original signal through, be it 480i, 720p, or 1080i. The TV would then scale the signal itself, and do a much better job than the STB. This also allows easy zooming of 480i letterboxed material from your TV remote. The TV screen will flicker and switch modes when you change channels; this bothers some people.
To change output resolution on the 505, there was a little red button on the right front of the receiver.
I always found Shaw Direct SD looked terrible on my 40" LCD through DVI/HDMI but looked great from an old 305 through s-video to a 20" CRT.