If your source media is DV, then just use the NTSC DV project template to get the correct settings.

If your media is being interpretted with the wrong aspect ratio, that could cause your vertical bars. One quick way to fix it is to go into the event's pan/crop properties and uncheck the "Maintain aspect ratio" or whatever that box is. The media should then stretch to fill the frame.

But if your source is from a Canon GL-1 those thin vertical bars at the side are part of the video. Other cameras may do the same thing. You can crop them out but there isn't usually a need for that since they don't show up on most TVs.

When you render to NTSC Widescreen, it is probably stretching the video to fill the entire 720x480 frame. It's up to the player or the TV to convert it from the stretched version to the widescreen version. You would only encode the video that way if it was meant to be played on a widescreen device.

If you want letterbox formatted video, I would probably insert two tracks at the top of the project with solid black events on them - and then use Track motion to position one at the top and the other at the bottom of the video frame. That way you can easily position them and you can turn them on/off by muting those tracks.

EDIT: Don't forget that with leltterbox format, you won't render to NTSC Widescreen - you'll render to plain old NTSC since it's just a regular video with black bars layered on top.

Hope that helps!