I got it to work(just now) by setting the "sources"(in the main window) to, "window capture" only, and then going to settings>video and setting both resolutions to the resolution I use in Diablo II(1280x1024). There's always going to be black bars, or the like, since the standard aspect ratio for monitors has changed in the past 15 years/since d2 came out.
That's what I was hoping for too! I think it'd help a lot if a couple people are capable of skypeing while recording too.