Burn videos to DVD in widescreen format !

Its been a while since I messed with Video files and the complex nature of them, ie. codecs, aspect ratios, converting to DVD, file extensions etc etc, and now I need to re-train my brain again !!

Problem: want to burn my videos to DVD with 16:9 aspect ratio using Windows Movie Maker.

Background: I took a load of videos on our holidays, with a JVC Everio MG130 camcorder. It stores them with the .mod extension, which I believe can be just renamed to .mpg as they are mpeg2's. I recorded all the videos in 16:9, and they play back on the camcorder in 16:9. But in Media Player (Vista, HomePremium) they play as 4:3, and the MediaInfo program tells me they are in 4:3 720*576 format.
Now I open Movie Maker (in Vista) and it lets me import all the videos, I had pre-selected the 16:9 setting in the Advanced tab. The preview shows them in widescreen, but.........the actual video is 4:3 and the ends are padded with black bars !!
Then I try it in XP and its version of WMM, and hey presto it works, it shows them in widescreen 16:9 format, but............my excitement is short lived, I can only import one at a time and it crashes/hangs most of the time !!

So, what does the XP version of WMM have that Vista doesn't, and is there a solution, another codec or something, please help !!;)