I kind of figure that the encoder doesn't like changing aspect ratio between source and destination because the docs I just read (fascinating read) on the Windows Media sites suggest you should keep pixel aspects the same when cropping/resizing, or use some "unsquare pixels" type setting...

You could also maybe try using Avisynth up front and then encoding the stream that Avisynth sends to the encoder, it's a good tool for this sort of thing, I've found it to be excellent for resizing and cropping. The interface isn't very friendly (text files, but tools can automate that) but quality is superb, and the filter options are amazing.

Then again, maybe WMV won't accept Avisynth files... my personal philosophy is to stick with open formats like XviD but I'm a bit of a liberal, Linux, open source type of guy.