Hi Phil,
I wasn't sure what you were trying to accomplish. Scaling the text to change its width tends to distort the text as you said it does, Applying an envelope, well thats a lot of work for such a simple job, if Xara does it best then that is the tool to use, I have Xara as well so I rarely open Draw unless I am trying to help someone. I also have some engraving software that does a nice job but that doesn't help here.

Good luck and Have a happy!
Mike