thats pretty normal to see on an HDTV
when youve transcoded your video in encore it downscales it to standard def
which looks fine on a normal SD telly,
also considering youve selected medium quality, its not going to upscale and still present well on an HDTV
considering SD is 720×576 and a 1080i HD TV generally upscales to 1920×1080, your gonna end up with a fairly pixelated image.
it is possible on most TVs to choose your resolution when watching a SD DVD, but when you do that it generally doesnt fill the whole frame, leaving a smaller picture in the centre of the screen surrounded by a lot of black
~Peter Berthet
Sydney, Australia