This is more of a DVDSP question. Ask it over in their room to get a more detailed answer.
The basic idea, though, is that there are a couple of places you could check. The DVDSP monitor may be set for 4×3 and needs to be changed. Or perhaps the video track or the disc itself need to be set as an anamorphic DVD.
I know how to find those things if I poke around for a little while, but I’m afraid I don’t know off the top of my head. At any rate, there’s nothing wrong with your video. ALL widescreen DVD video is squeezed when you take it in to DVDSP. That’s the correct way to do it. You just need to ask the DVDSP room how to stretch it properly.