This should give you the break down of what your wanting to do, you may need a couple add on's for WMC to have all the tweaks needed
http://www.pcbuyerbeware.co.uk/How-to-improve-windows-media-center-in-windows-vista-and-windows-7.htm
How to improve the Windows Media Center's video picture quality
The picture quality of many downloaded videos isn't very good, but you can correct this. When playing a DivX video, switch Media Center out of Media Only mode by using your mouse to put the application into windowed mode (click the middle icon when you move the mouse to the top right). You should see two new icons in the Notification Area (bottom left corner): a blue ffdshow audio decoder and a red ffdshow video decoder. Double-click on the audio icon first to set the correct audio settings. Place a check mark in the Mixer box and then click Mixer. Select the Output speakers configuration from the drop-down menu. For most PCs with surround sound, this should be 3/0/2 for five channels, but for 7.1 speakers select 3/2/2. If you have surround-sound speakers, also place a check mark in the LFE box to send the subwoofer its own signal. Next, click Dolby decoder and choose Apply Dolby Pro Logic II decoding to all stereo sources. This should upsample stereo soundtracks to use all of your speakers. Click OK.
Now double-click on the video icon. For every setting we mention here, make sure the Process whole image option is selected. Place a check mark in the Deinterlacing box and choose Cubic interpolation from the drop-down menu. This will deinterlace TV programmes so that they match your TV's progressive mode. Use the mouse to place a check mark in Postprocessing, and another in Picture Processing and adjust the sliders until you're satisfied with the picture's colour, brightness and contrast.
Because downloaded video can look disagreeable, place a check mark in the Blur&NR (blur and noise reduction) box. Setting Soften to 40 or less and Gradual denoise to 40 or less should help to reduce noise and produce a better image. The detail in a video can be improved by placing a check mark in the Sharpen box. Select Unsharp Mask and adjust the Strength bar until you're satisfied with it (25 should be good enough). To make sure the picture look as good as possible on a TV, you can force ffdshow to upscale video so that its screen resolution matches that of your TV. Place a check mark in Resize & aspect. Select Specify horizontal and vertical size, and enter the size of your display in the box below, such as 1,920x1,080 for 1080p TVs. The video maintains its aspect ratio by default, so old TV shows will have black bars down the side of the picture. If you don't want this, select No aspect ratio correction, click Apply and the image will fill the screen. You can now maximise Media Center and use it as normal.