Most any player should up-scale it.
Is it a wide screen DVD?
Maybe I'm not clear what you are asking.
What is your source .What are your sequence settings.
What are your export settings, pref a screendump.
Maximum resolution for DVD is 720 x 576 (PAL) or 720 x 480 (NTSC). Most "modern" DVD players will upconvert your DVD output to HD to "fill the screen" as it were, if you tell them to. Upconversion is usually the default, but not always. So check the settings on the DVD player, and the HDTV itself. Somewhere in the playback chain you need to have something doing the upconvert. Otherwise you'll get what you are probably seeing, which is a small picture surrounded on all four sides with a black border. IOW, letterboxing and pillarboxing both.
I'd say check you TV settings.
So you were correct. When we played on a DVD player (instead of the Xbox player), it upconverted to fill the screen.
Here is my next question: Why is the video so grainy when it fills the HD screen? I realized that it is 720 x 480 resolution coming from a DVD, but how is it that standard movies look so much better even on DVD (not blu ray).
Since I'm starting with HD raw footage, I would expect to get an excellent picture even with DVD resolution.
Using PPro CS5 (I think it is updated to 5.03) I start with AVCHD and have PPro do the downscalling to Widescreen DV AVI to give Encore for authoring
My resulting DVD is "almost" as good as a commercial DVD... so if you tell everyone what your "HD raw footage" is, and your exact settings all the way through the process, someone may be able to help
Why is the video so grainy when it fills the HD screen?
You need to play the dvd on a dvd player with upscaler or BD-player or your footage is not so good a quality to start with.
For authoring use DL or export directly from PPro to mpeg2-dvd and import that into Encore.
how is it that standard movies look so much better even on DVD
'Standard movies' are shot on film (which is much better than HD) and use software costing $50,000 to make he DVD. That's how.