I have attempted using "desktop" instead of a pre-set and then using custom dimensions.
That is the way to go. So what is the problem?
After I create a custom size in desktop the video outputs with black bands on top and bottom. I must need to change the video size in more than one area but don't know where? please help.
"Video outputs" in what format with which encoding settings shown how? Give us the necessary details, like source material, codec, sequence settings, export settings, etc.
I guess / assume you need to export as Flash for this purpose.
Change the dimension of the flash frame in the export settings to match your project dimension.