I'm trying to encode some videos to the best quality for Windows Media center.  I use it as my whole-home DVR, so I have Xbox 360's as media extenders.

I'd like to "up-sample" the DVD's, I think, to play back at 1280x720, remove as much of the letterboxing as possible (crop top and bottom?)

I've got a moose of a PC, so doing a multi-pass encoding to get best quality is ok.

Any suggestions for my settings?

You don't need multi-pass to get the best quality. Just do Constant Quality encoding (it's selected by default). Use auto-cropping, turn on Decomb if there's any interlacing, change the resolution if you really feel like it. (I don't usually and just let the player do the upscale). You might have to experiment with Anamorphic settings but "None" would be the safest.