I would also like to thank Fergal for his summary, which contains all the information needed to get a good video flow going again for widescreen DVD users of the MS video tools. I was too busy to finish this off myself, even though I was able to help in discovering why Windows DVD Maker caused the problem with the output from the newest Windows Live Movie Maker - and it turned out to be a very small bug, with an easy workaround.
It would be nice to hear from someone within Microsoft on whether these tools have any future on MS platforms. It's good to see that Movie Maker is still supported on 8.1, although still without an obvious European DVD format template. It would be even nicer to see a new release of DVD Maker, with the aspect-ratio bug fixed, and perhaps even a release for Windows 8.1. This would give MS the opportunity to bring in a lot more new users who like to be able to process video without buying a lot of expensive tools, but currently either have to downgrade to Windows 7, move to a Mac, or buy some commercial tool. It might make Windows 8.1 a more attractive platform, something it badly needs.
I have to admit that, even though they are a great deal slower than e.g. Nero (which I used to use for slide shows), the MS video tools produce a superb result once you have a PAL DVD template in place - and very easily. Fortunately, I have managed to avoid Windows 8 so far, and so I can use the current MS video tools and benefit from the really excellent results they give. It would be sad to see MS let them dwindle out of use for want of a small bugfix, and a Windows 8.1 release.