Ok, It’s not the TV as the monitor I’m using does exactly the same.
I’ve found that no matter how I change the config.txt or raspi-config, the screen resolution in Screenly shows the same as in my original post, “…640x480…” and the display is distorted, almost unreadable. I have verified that the images are 1920x1080, which Screenly says are supported.
Like another posted said in Oct '20, “Not a good first experience”