New to this whole video editing thing, I'm not sure how to unfortunately. The border was even bigger before, then I converted it to 16:9 and it shrunk it down a bit but didn't remove it completely :X
Well, using Movie Maker you will lose half the quality your HD-PVR could provide. Try to use something decent
You can create a "master" video on a program called Virtual dub and crop it there. Then reencode and add pics and stuff on movie maker or the program you are used to.