Some more information would help. What cables are you using to connect the Zune, and what are the names of the ports on the TV that you're plugging things into?
Do you have the correct input selected on the LG television? The TV will only display content sent through the port on which it's set to receive content. Double-check to be sure that you're setting the TV to display content from the correct port.
If the cable you're using from the Zune is connected to an HDMI port on the TV (this is the option that will give you the best-looking results), then try setting the Zune to HDMI Auto. Given your other HDMI settings, the Zune should set itself to send at the highest resolution available on the target device. So, the Zune should configure itself to send out video over the HDMI port at the highest resolution the TV can display.
When you hear audio from the Zune through the TV speakers, what input on the TV is active?