1) 1280x1024. But you should know that its always better for quality to keep the original size. So sacrificing a little in game quality to record at 10280x1024 pays off in the end.
2) You shouldn't get any borders, specialy if your not watching in full screen. Depends on the video player probably. And even if it dosen't other people should still see it in widescreen
3) It probably is due to the resolution. Have you seen this guide
http://stage6.divx.com/user/brushyot...ies-for-Stage6 ?