hmmm, you must have a very low resolution monitor, probably a laptop but who am I to judge, but yeah I can post what I did, and yeah you can keep it at the current resolution but it kinda beats the purpose of having video enhancer do all this, virtualdub should be enough for what you are trying to do. Ok I guess I will type out what I did then.
Notice: the pictures I made are not exact to the instructions...example:in the picture the check box isn't checked but instruction says to check it, in this case check the box. The pictures are to just show the placement of the object for that particular step.
1) open video enhancer, should be in advance mode.
2) select desired input video.
3) select desired output destination.
4) clcik on choose.

5.1)keep audio as (No compression: copy stream).
5.2) click on ffdshow video encoder.
5.3) click configure.

6.1) set Encoder as DivX 3.
6.2) Set FOURCC as DIV3.
6.3) set Mode as one pass quality.
7) set quality slider bar all the way to the right (%100).
8 ) on the left side panel click input.
9.1) check the Enable image processing.
9.2) and click configure.

10) left side panel check and click Postprocessing.

11.1) drag slider bar all the way to the right (%200).
11.2) check fast SPP deblocking.
11.3) you can check the Process whole image but its optional.
12.1) click Apply.
12.2) then click OK.

13) click OK again.

14) click OK again.LOL.

15) make sure you have nothing in the Filters Sequence, unless you want to.
16) clcik Start.

17) Wait......your all done.
Hopes this helps, continue to ask if you have any questions.