Good that it worked.
I'm not exactly sure what you mean by having both 60i and 60p selected. Do you mean in Arcade OSD?
Just in case, remind with HD 5000+ you should enable EDID emulation. This will create a 640x480@30i mode, which will be read from the EDID. The other interlaced modes added by VMMaker will be listed as 60i etc. (not halved).
Regarding the "blurriness". I think now I know what you mean. Indeed both my HD 5450 and HD 6450 show some sort of filter when an interlaced mode is enabled. I believe this is actually a built-in feature, by design, at the driver level, rather than an issue. In my opinion, this makes much more bearable working on the desktop with interlaced modes than doing it with legacy cards, where the flicker is absolutely annoying. But of course you may dislike it... unfortunately I don't know if it can be turned off, but I honestly don't see it as a problem here. GM applies bilinear filtering by default on interlaced modes, for the same reason.