My settings are correct. Official channels all look fine.
There is no way that 590x332 banner images can look right in 16x9 unless they are "smushed" beforehand, which none of the images in this thread are. Are you sure you're not just overlooking the stretched images? Take a ruler and measure a disc on your television both horizontally and vertically. If you're actually in widescreen you should have different measurements.
EDIT: I've actually made a WAD but I'm afraid to test it. If anyone is confident in their ability to recover from banner bricks and wants to give it a shot let me know.