So Ralf already said that the “Smart” option is stretching the image. Letterbox 1 seems to be the only option that looks correct.
But what I’m really interested in is to know which resolution aspect ratio to choose. VorpX suggest 4:3 or 5:4, but why exactly?
The closer the ratio is to 1:1 the easier it is to correct the AR, Especially the ‘Smart’ option works better this way.
‘Smart’ tries do give you a correct AR in the center of the image, where you look at most of the time, at the expense of some top/bottom-distortion. That works reasonable well in 16:10, but a lot better with 5:4 modes.
Short Disclaimer: Judging from feedback during the closed beta not everyone will be able to get a 5:4 mode stretched to fullscreen on his Rift, you might be out of luck. If those modes look completely wrong on your Rift, stick to 16:10. But if it works, you should do it. Your best bet is to let the graphics card do the scaling. At least all newer nVidia can do this (search the nV Control Panel for this option).
So far what gave me the best results was to use 16:10, choose Letterbox 1 and then increase the Vignette scale so that I don’t see the borders.
Letterbox 1 jut always looked correct, and smart never did. I tried this with 4:3, 16: and 16:9