Krusty,
Thank you for the feedback. I still haven't figured out a solution. When I record as widescreen, the best resolution available is 480 (I think). When I save for 1080, it appears to be "squished".
I am using windows film maker. On my system, it looks great. It is when I go to upload to youtube is when I seem to run into problems (in widescreen mode). I don't know if it is because I am using the free version of Fraps, Windows Moviemaker, or if it is Youtube...
Any pointers is much appreciated. Thank you!