You are in the "Edit Quality Presets" window. FYI, in CS6 (probably in CS5 too), this is labeled as such at the top rather than "Export Settings." See a second issue after the screenshots.
The issue is that this window defines a preset. It allows you to modify the basic settings, and then save them with your own name. BUT, the preset is not applied to your asset until you pick it from the "Transcode Settings" window.
In the following image, the "Stan Custom" is a preset I made in the "Export Settings" [CS4] window (called "Edit Quality Presets" windows in CS6). In the4 drop down, you can see that "Automatic" is applied. I can change that by selecting the Custom option or any other option in this list.
To check w hich option is applied, without going into this window, just look at the transcode setting in the project panel.
Second issue: in your screenshot, the source size shows as 720X480. I don't think that is what you want. This means that the asset you are applying the setting to is not HD. Probably, you just picked that one to show the settings, but if this is the actual source file, that's a problem.