Does XBMC upscale?

[Bally12345]

I was watching a DVD using my ASRock 330-HT with and play back seemed a bit ok but not amazing however the exact same dvd played in my PS3 looks a lot better.

Is there a setting im missing? Also getting loads of horizontal somethings not sure what the correct term is perhaps something to do with interlacing?

 

[hawkish]

you can set up the sd scaling in the settings

 

[Bally12345]

What de-interlace is best to use? Iv set to blend havent a clue what all the settings do lol