I'm having a very similar problem. Wouldn't describe the SD Sky Sports channels as 'unwatchable' but they are really poor quality compared to, for example, watching Match Of The Day in SD on the Beeb. I have also changed outputs/cables to no effect and am running an older Tivo box, not that I believe that's a problem.
I subscribe to Racing TV in HD & that picture is excellent, so it's clearly a Sky SD problem. I've only just returned to Sky Sports after a break and the picture quality is definitely worse than previously on exactly the same kit, which is very disappointing. I could report this as a 'fault' although I don't really think it is?