Church AV Guy's post reminded me I didn't address this point, billmich. In my experience, the cheap HDMI>S/Composite converters DO NOT preserve any widescreen flags. Any capture device you connect to the analog outputs of the converter will record whatever aspect ratio the converter is displaying, so the captured recording becomes a raw unflagged version. IOW, the converter takes the normal-looking 16:9 HD signal displayed on the laptop and downconverts it to SD 16:9 that's *anamorphically squeezed into a 4:3 frame*. In my case, I'm streaming from laptop to DVD recorder, so the resulting DVDs end up being optimized for 16:9 TVs (because they display as squished on 4:3 TVs and require manual unsqueezing to 16:9 using the aspect ratio button functions of an HDTV).
Aside from needing the flag to trigger players to letterbox for 4:3 displays, I'm guessing (?) some 16:9 TVs use detection of it to automatically unsqueeze anamorphic video to 16:9. My Pioneer DVD recorders can make 16:9 DVDs, but they are anamorphic squeezed with no WS flag. These don't letterbox on 4:3 TVs, and my Sony LCD HDTVs with auto-aspect-ratio do not automatically unsqueeze them to 16:9 (instead i have to fumble for the remote and manually expand the frame). The Sony HDTVs *do* automatically unsqueeze anamorphic DVDs I make on my PCs using DVDflick, if I set it to author as 16:9 with the flag.
Perhaps I'm wrong, and the TV is sensing some other flag as trigger to auto-unsqueeze. And this is only an issue if your TV has an automated aspect ratio feature: my Sony does, my Samsung supposedly does but it isn't reliable, and my Panasonic is totally manual (needs to have AR set via remote for every video).