[Ann Bens]

When capturing footage from VHS it is automaticly 4:3. If you want to make it into widescreen (which i do not recommend because of loss off quality) you import the footage into a widescreen project, scale the footage up and export to widescreen dvd.
Other workflow is putting your footage in a Standaard project and adding black bars on top and bottom footage and exporting as standard dvd. Black bars can me made in the titler.

[Ann Bens]

CS4 might be the answer.

[Ann Bens]

Set the work bar over the part you want to export. In the export settings set it to ‘work bar area’ instead of ‘sequence’

[Ann Bens]

Put the 3 clips scaled down next to each other in a sequence, fitting the screen from left to right.
Now put this sequence in a new sequence and keyframe motion, now all 3 clips move together.

[Ann Bens]

Use a track matte and add to this track matte quite a bit of fast blur for fuzzy edges.

[Ann Bens]

Try flicker removal in the field options.

[Ann Bens]

Mainconcept MPEG HD Pro.
Or wait for Premiere Elements 7.

[Ann Bens]

Try the audio mixer.

[Ann Bens]

Scale the sequence, it should show up as a letter box movie.

[Ann Bens]

A matter of fact a dvd recorder makes things worse. Premiere does not take kindly to mpeg.
To which audio format did you convert, the best format is .wav.