btw those lines are simply de-interlaced frames, just means that the DVD mode should be set to NTSC or PAL accordingly, and then maybe "Force Film" used. But haven't used GK in a long time so can't hardly remember.
While this is an old post I figured I would reply anyway.
Sounds like interlacing. Do the lines look like small black and white lines when there is movement?
If so you forgot to deinterlace. There are a few ways to deinterlace. You can take a project that’s already ripped and run it thru vdub and use a de interlace filter or if your going to re-rip it. When you first load the project file in GK (not DGI) it comes up with the preview shot after you select save. It will give you a bunch of options. Look for "field operations". There are a few modes and it really depends on the source for what’s better. But a standard "Field Deinterlace" (with the blend) works well for most.
But to make things more confusing there are some new modes coming out as well that might replace the regular deinterlace.
Anyway if you still are having issues just drop a post in here I around from time to time 8)