Hey Dan-
I had a problem using the smart fit function as well, except it was on DVD-R 4.7GB discs. My problem was that, although the old VCR tape I encoded where the sound/video was in sync with each other, the sound/video was off by a split second on the DVD. I sent a question to support today and got a response saying to uninstall all burning software (including Nero and Pinnacle), then reinstalling the Power Director software.
I am at that point right now, and will post a follow-up to let you know what my outcome was after the uninstalling process in a day or so. Otherwise, has your situation changed since your last post?