DV widescreen becomes a letterboxed mov

Started trying to upload some DV Pal widescreen clips but I can't seem to get Sony Vegas to convert it to mov widescreen. . . . it will only letterbox it.
Its been filmed in true DV widescreen and plays that way in Vegas but what ever combination of aspect ratios, etc, I try out it ends up either letterboxed or looking like a squished 4:3 ratio clip.
Aspect ratio is set up correctly on the clip as are the project preferences. . . . . anybody got any ideas as to what I am missing here?

Thanks, Mark

The squished look is normal for widescreen DV footage. For P5, I would leave it that way (no stretching, no letterboxes) and check the 16:9 anamorphic option at the keywording interface. It´s gonna be displayed correctly then.

Cheers,
Stefan

Thanks Stefan, that worked perfectly. It is the QT player that seems to show the widescreen squished. I have uploaded several widescreen mov files as native 16.9 and everything is showing in the right format.