To use even more pixels, you should have the cam in horizontal mode, zoom in even more so that the top and bottom of the image hits the edges... u can even go a touch over as u have 190deg. the sides will be cropped... but that's ok as u only need 120deg across and will have at least 140 across. This is for a three shot stich. U'll gain even more pixels and therefore a cleaner image.
Oh yeah, don't select fe1 or 2. Instead select M and by toggling the mode button u'll be able to switch between shutter speed and aperture. U'll want f8.0 or higher (Well at least thats true with the FC-E8) and shutter speed u'll control with the wheel. U'll see a light meter --> I---I---I---I---I---I which looks a bit like this, with underexposure left and overexposure right. (It's worth taking a shot over, correct, underexposure for photoshop blending work). Also, depress M-Focus and turn the wheel until u select INF.
These are at least the settings I use with my CP990 and FC-E8
Hope that helps
If I only had an hour to chop down a tree... I'd spend 45 mins sharpening the axe.