I have been trying to figure out video level settings in madvr myself. If I select my tv and ati card to full 0-255 then leave madvr at default pc setting (0-255) I get crushed blacks I.e. nothing displayed below 16 on a test pattern. The picture looks fine to me though and way better than setting madvr to tv levels which shows btb but washes out my screen in a gray haze. I wish there were clear instructions on how to configure everything.
Vroom I had the exact same problem you had (crushed blacks with everything set to 0-255) and it was crazy because there was literally no combination of brightness or contrast settings that would let anything below 16 show up on my test patterns. I was pulling my hair out, and then I found a thread where someone mentioned that nvidia cards sometimes don't actually output 0-255 even when they're set to do so, but that the madvr directory in JRiver has a tool that will fix that configuration.
So I ran the tool, and instant fix. No more crushed blacks and everything works right. Not sure if you have the same problem, but if you do it's a 15 second fix that would otherwise never be obvious (because the card says it's outputting at application settings, and the application is set to 0-255).
