Hello Derby, and welcome to the forums
WinDVD is a video player only, but the parent company, Corel, has several programs that can convert avi to dvd under the Intervideo and Ulead names. Exactly which program are you using?
It sounds like you’ve made an incorrect setting in the video output resolution, but that is just a guess, since I don’t know which specific program you are using.
If you’d like to try an alternative, I can recommend a couple of free programs that will convert avi and give you a complete dvd ready to burn to disk. DVDFlick is one, and FAVC is the other. Neither will make elaborate menus, but they are functional, and you can make the dvd without a menu if you prefer.
Using the HC encoder that comes with FAVC, you will get excellent quality results. You have to install AviSynth and Net 2.0, but they are free and there are direct links to both at the FAVC homepage: http://favcfavc.googlepages.com/
Actual burning to the disk, I recommend using ImgBurn. It comes with FAVC, but I use it for most all of my video burns these days. ImgBurn is free to download and use.
If you would prefer to work through the problems in your current program, please post back with more specific information about it.