yeh, the dvd player settings was what i thought, which is why i asked to see the menu and movie on your TV. I was a bit confused when you said that the movie displayed fine so i wanted to see if the movie was actually being squashed too, but that you weren't noticing this on the tv because your movie has the black matte bars. Stretch to fit is definitely what you need to use, not zoom, for the menu in DVD architect.
Also, if you have done the menu in photoshop, duplicate the text files as individual separate layers, save the whole image as a psd image file file , then right click on the highlight button on your menu and change the button style to image only, select the highlight tab on the button properties window, then change the style to custom, select the image that contains the layers for mask, then the layer and adjust the image on the menu until the text highlight aligns with the text on the menu. you will now have a nice button highlight instead of using the standard rectangle highlight and it will look more professional