Finally got back to this and did some more testing and here is what I have found. Let me know if I'm on the wrong track.
If I just install the crt_emudriver everything is fine. I can reboot a bazillion times and arcade_osd has a few of the resolutions with an i instead of a p under the vertical refresh rate, Windows 7 list a 30Hz, Interlaced option, monitor reports them as 15kHz, etc.
As soon as I run VMMaker as admin and then reboot, all interlaced resolutions are no longer interlaced. arcade_osd lists everything with a p and the monitor has them at 31kHz.