Personally, I record in Camtasia at 800x600, then have it
resize to 640x480. When I import that file into PowerPoint, it has
a huge white border around it, and I have to resize the video until
there's no white border left.
It's still quite large on the screen, and the fact that
PowerPoint / Presenter seem to resample/rescale the video seems to
lower the quality some, which is why I often use heavy zoom effects
within Camtasia.
I've tried using Captivate for creating the videos, but
honestly, it's faster and provides a better end result if I'm using
Camtasia. What software are you using?