I will get right to the point. I have two Extron upscalers: DVS 204 and DVS 304 DVI.
Connecting Wii via a component cable to Extron DVS 304 and then using DVI cable to connect Extron DVS 304 to a TV results in a nice picture with no noticeable artifacts.
On the other hand, connecting the same Wii via the same component cable to Extron DVS 204 and then using VGA cable to connect Extron DVS 204 to the same TV results in a distorted picture (please see the image below).

The same happens when I connect the Wii via a composite cable. I also tried the following: Sege Genesis -> JP21 cable -> XRGB 2 plus -> Extron Interfaces -> TV and the result was the same – great picture with DVS 304 DVI and a distorted picture with DVS 204.
Also, interestingly enough, replacing the Wii with an old Blu-ray player (i.e. connecting the Blu-ray player via a component cable to DVS 204 and then running a VGA cable from DVS 204 to the TV) results in a nice, clean picture.
Here is what I tried:
* Four different VGA cables
* Two different computer monitors
* Connecting the output of Extron DVS 204 to the input of DVS 304 DVI and then connecting the output of DVS 304 DVI to the TV/monitor.
* Using three different Wii component cables
Can somebody please tell me why everything works great with DVS 304 DVI but not DVS 204?