I've found that Sony Vegas is a really good tool for successfully being able to upload your videos with that high definition/standard definition option.
The settings I use are:
CBR Windows Media Audio 9.2, 192kbps, 44kHz, stereo
Bitrate VBR Windows Media Video 9 480x360 @ 59.94(Double NTSC)fps Average bit rate 1.50 M
and this will produce a wmv file that when you upload it to youtube, within an hour it should give you the hd option as well as the sd.