Thanks a lot Wolfgang for the simpler code, I’ll replace mine with your suggestion, in actual document the margins width are much larger and font smaller too.

I use binaries on Win64 platform (installed using command line method: first-setup.bat --modules=all):

$ ls -l $(which luatex.dll)
-rwxr-xr-x 1 Jo Administrateurs 9567232 Jul 11 22:29 /c/ConTeXt/test/tex/texmf-win64/bin/luatex.dll 

$ luatex --version
This is LuaTeX, Version 0.97.0 (TeX Live 2016/W32TeX)

$ context --version
mtx-context     | current version: 2016.07.18 16:46

josephcanedo@gmail.com

18. Juli 2016 um 23:21

Dear all,

In some cases specifying \setupalign[stretch] does not seem to have any effect with latest betas (live, 2016.06.20 22:14 version are fine, but 2016.07.18 is not), and the output has now overfulls instead of (admitedly a bit large) underfulls.

Attached  simple (albeit bit extreme) MWE. Sorry for the relatively large MWE but could not figure out how to make it shorter.

emergency_stretch.pdf produced with latest beta (updated with first-setup.bat today).

emergency_stretch_ok.pdf produced with 2016.06.20 22:14 version.

I can’t reproduce your problem but justified text isn’t the best option in narrow columns.

Below is a simplified version of your code which doesn’t use the parent setting from margindata and marginframed setups, there is also no need to set the alignment twice and marginframed has no method key (the source is wrong).

\definemargindata
  [InOuter]
  [method=first,
   location=outer,
   margin=margin,
   width=\outermarginwidth,
   style=\tf,
   stack=continue,
   align={normal,hanging,morehyphenation,hz,verytolerant,stretch}]

\definemargindata
  [InInner]
  [method=first,
   location=inner,
   margin=margin,
   width=\innermarginwidth,
   style=\tf,
   align=outer]

\definemarginframed[InOuter]
\definemarginframed[InInner]

%\setuplayout[width=12cm,rightmargin=4cm]

\starttext

Foo \InOuter{\input knuth } Bar.

\stoptext

Wolfgang