Hey Ho Ppl

Im new to this forum but not new to Premiere and its endless problems. However lately I have come across a problem that is making me tear my hair out so any help at all would be MEGA appreciated ppl.

This is my problem:- I have an original film (Superman 1) imported into Premiere 6.5 and all is good for editing however when I export to avi file the safe margins really mess the image up, for some reason its as if Premiere zooms into the image therefore making the image look pixelated and crud. Is there anyway I can resize the film to sit nice and neatly within the safe margins? I have tried to resize the final output but that resizes the actual video aswell (again doing the whole zoomed look).

Cheers ppl and any advice greatly appreciated!