Just an update on this, I opened it up and the board looks to be different that other's I've seen floating around. It looks like the buck converter outputs 3.3v not 5v as others have shown. So that would make sense why other's work fine on an NES.

The ebay seller issued me a refund, so that's cool.

I've ordered another one from amazon that seems to be 5v compatible.

My lcd works fine

I got the 3.5" and the 7" ones. definitely get what you pay for but the colors aren't too bad if you tweak the brightness and saturation controls.

The 7" is actually a good performer and the 3.5" has more issues with Moiré and color bleed, but I haven't experienced a signal as bad as you are showing.

The one I got is a rear view monitor for a car.  Im able to power the monitor with the power coming out of a NES controller port.

Prob not the safest thing to do but it has worked for me for the past few years,

If you are using a wall wart, then maybe the AC power is causing your issue?  I think they need DC power.

Disclaimer: I am no expert and am probably wrong. Just trying to help.

Is there any way to fix the video signal? Does this mean that I pretty much just can't use it with my NES?

Its probably the video signal then. not the adapter. Ive seen the problem with some video projectors as well.

I just tested it with my c64 composite video, and it worked great!

So now I'm really at a loss here. Do these only work with 12v?

EDIT: Just tried it with my nes supply (what is that, like 9v?) and it was the exact same story.

my guess is: wrong power maybe too much amps?
or the video signal isnt strong enough or something isnt connected right. Do you have anything else to test it with?

It looks the same, just stretched out. No color change. That isn't damage, it's just the stupid screen protector thing I haven't taken off yet.

I just tried another 12v wall wart and it was the same story.

I'm trying it with both a genesis and an NES and I get the same results.

What is strange though, is that initially I was using a multi A/V selector box thing and thought maybe that had something to do with it. It did not. But it has these push buttons on it that actually physically go down and complete the circuit, so there's no digital logic going on inside at all. If I rapidly press the same button down the screen glitches/flickers, but at times it will show the full color for a split second. I would assume that rapidly unplugging the rca cable would do much the same thing.

Is it possible that my screen is stuck in pal mode? Is this even what it looks like when you run an NTSC system on a pal screen?

My other idea is maybe there's a grounding issue? It looks like the only ground going into the screen comes off the 12v barrell. Shouldn't each rca jack have it's own ground?

What does the image look like when displayed in full screen mode? Is that damage in the upper right corner?

...and cables.

Check your power.

Just a 12v 3A wall wart.

How are you powering it?