So why didnt they make it widescreem ?!? I mean the levels are wide so why not just increase the screen width Im sure our good old 360's could cope with the extra processing power!!!!!

Really annoys me playing in in 4.3 on my nice big 28"

Stretch the image if you want. Basically, Widescreen would have involved them recoding the game, something that Capcom obviously didnt do.

But they have recoded part of it to enable live, surely a quick change to the viewing window code wouldnt have take more than a few hours

If they wanted to stretch or crop the image into 16:9, then sure it would have taken a couple of hours. But I don't think you would want either of those....

They would have had to basically re-do the entire format of the game into 16:9 which would have been a big waste of resources/time, considering the amount of money they would make for doing that.