I had the problem of 640x480 being interlaced on my monitor (D9800) after running VMMaker.
I opened ArcadeOSD, selected the 640x480 interlaced res, hit 2 to edit, selected Edit modeline, set Lock vfreq to no and interlaced to no.
After setting normal
VGA frequencies (25.18MHz, 31.475kHz, 59.952Hz), positioning it properly, and saving the changes, it has been fine.
Although I can only guess at what's going on, it seems that if vmmaker thinks it should make the 60p, it uses the built in mode (which would be uneditable in ArcadeOSD) but if you let it make the interlaced mode, ArcadeOSD can 'override' that back to progressive.
Keep in mind that in order to try what I did, you'll first need to remove the 60p line from resllist.txt and recalculate to get the editable interlaced mode back.
--Nexusmtz