What ive done so far.

I want to add borders to my vhs(pal) conversions as the quality is so much better(SVCD)this is my first attempt at svcd and at boarders so
I captured image at 480x360
frameserve avi into TMPGencPLUS 2.52 via virtual dub

Now i load svcd template and under settings VIDEO i change size from 480x360 to 480x576 aspect ratio 1:1.

Under advanced i leave source aspect ratio as it is 1:1
Video arrange method i leave as is full screen(keep aspect ratio)

While still at advanced i double click on clip frame and chose
Arrange setting
Arrange method is full screen(keep aspect ratio)
input is 480x360 1:1 and output is now 480x576 1:1

now i encode movie
after its finnished it looks excellent but it looks a little stretched in close up scenes
CAN any body tell me what im doing wrong