4 Qts Oil, dipstick says overfilled???

I have a 2000 Passat 1.8T. I recently changed the oil and put in 4 qts. I ran it for a little while to warm up and then checked the oil level and the dipstick said it was overfilled past the full mark by about 1/4". Anyone else ever experience this problem?
I know I drained all the oil from the pan, but could some oil have been left in the pan to cause it to overfill. I didn't even put in all of the recommended oil (4.2 qts).

Additionally, I have been noticing a burnt oil smell after I have driven the car for a while. There are no leaks, and it smells worst if I turn on the fan with "fresh air", or if I smell around the rear part of the engine. Any thoughts?

Thanks.