How far back are you sitting from the screen? A good rule of thumb is 1.5 times the screen width or more? The 854 x 480 native resolution probably does not help matters either. My LCD Z2 is 1280 x 720 and SDE is not an issue unless you get very close to the screen, at normal viewing distances there is not issue. LCD's by nature are more prone to people talking about SDE, so I am a bit suprised this is a problem for you. My guess again, is that it is related to the resolution. I assume your running in Progressive mode on either the DVD player or the Projector? What position do you have the zoom set, is it maxed out, or are you not zooming at all to fill your screen? I'm not sure a new DVD player will help much, but I can tell you I have the Panasonic S97S HDMI player, and I think nothing else can match it for picture quality around $300. 720p or 1080i over HDMI/DVI is jaw dropping. And again no SDE.
Anyway, I hope you find a resolution. This is one reason I tell people to take the LCD route, as you can get a much higher resolution cheaper than DLPs of the same resolution, or High Definition.
One thought, try defocussing just slightly, I have heard that works on LCD's, not sure about DLP's.
