It probably has something to do with your origional content's aspect ratio. If your burning a 4:3 movie to a 16:9 resolution the quality is gonna be horrible, so try to avoid this situation. But if you wanna take it from a higher aspect to a lower one you can open tmpenc and goto settings->advanced and dbl click on the "clip frame" option, if you see the black borders in here resize the image until they go away, make sure you have the "Resized image is used to display preview" turned off. Then you can goto the arrange settings page and select "full screen". That should get rid of the black borders. I've found that if your doing this from a HQ source and going down in ratio aka 16:9 dvd to 4:3 vcd things go well, but if you try to take a LQ source and do the same, it usually gives horrible quality. aka 16:9 DIVx to 4:3 VCD = ugly. I generally do this in my avisynth script, aka clip(X1,Y1, -X2, -Y2) then run it through grip filters and everything comes out okay.
Hope this helps. I'm sure these guys can help you more if you give them more info about your source.
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