Noel,
What is the projection listed in the layer properties? Have you confirmed that the projection listed in the tiff header is different? ArcGIS reads tiff header information. The other thing to consider is the coordinate system of the map's dataframe. If it is different, then ArcMap will project the data on-the-fly to whatever the dataframe is. My guess is your data is either in a geographic coordinate system, or the dataframe is. To check the dataframe, go to ArcMap > View > Dataframe Properties > Coordinate System tab. Perhaps some screen shots would be helpful to show the distortion in the X direction, and of the layer properties (coordinate system info). It would also be helpful to know the location of the data - some projections distort more severely in certain geographic locations.
Best Regards,
Eric