Okay, seems no one here has answers to these problems?
Well that's okay, cos I worked them out all by mesen
Firstly, I needed to look a bit deeper into Virtualdub, and specifically I had to get Virtualmod, which has further options. Namely, an additional frame per second option which affects playback frames, not speed. 16 FPS still stutters a little, but it was solved by putting the FPS to 12.
The aspect ratio I worked out within the resize filter. My MP3 player insists on keeping 4:3 ratio, so I needed to check the resize to equal the AR I wanted, using the width as 160 (my res)
For example 16 / 9 ratio needs to be 160 / 90 in resize. I then use the expand option also to 160 / 120. This adds the black bars and stops the picture getting squeezed. Bingo.
Only problem I see now is some visible tearing? Anyone have an idea how to fix that??