I have the same issue, except the symptom is the opposite - I am trying to burn a DVD in which the video aspect ratio is 4:3 (and I have WMM set to 4:3), but when I select "burn DVD" it states widescreen, and the resulting wmv file is changed to widescreen. I cannot figure out how to set the burn aspect to 4:3.
It just seems to me that there is a bug in the protocol between the DVD burn utility and the file. Occasionally I have seen an issue where the saved project gets into a mode in WMM where the 4:3 aspect is stretched to 16:9, and nothing seems to fix it except to abandon the project and start over (this is the only way I have found to fix that issue). So this aspect ratio bug is not limited to dvd burn, but also appears in WMM.
Personally I would rather see a solution in the current or subsequent WMM and not have to revert to earlier versions to work around the problem. Version 2.6 was designed originally for XP and made to work in Vista, and was never tested in W7 which I have. Just saying I would rather not do that experiment, as it might corrupt some W7 files. I am currently using version 2011 (Build 15.4.3555.0308).