If, when playing the DVD through your set-top player the picture contains tall-thin people (which i what i assume you mean by 'stretched vertically' then try the following, if you haven't already. Change your DVD player video option to wide screen TV. On my player this effectively stretches the picture wider giving you a widescreen (anamorphic?) picture and the image ratio should be what you want.

I'm just wondering if you have effectively built yoursefl a true anamorphic DVD and maybe have your player settings to P&S or letterbox. If so then the above should cure things.

Just an idea.