What you are seeing is interlacing. This is because DVDs are interlaced, designed to be played on a TV, while computers and most player software on computers is non-interlaced.
If you play the disc on the TV, you will not see the interlacing.
Thanks for taking time to respond. Actually the pixellation is coming on the DVD being played thru TV as well. In some cases the picture is very choppy and severe. I repeated the capture using Windows Movimaker - and created a DVDin third party software, no problem there. Secondly, I converted the AVI file into MPEG HD 720 P and then created a DVD using a third party software - no issue tere either. The pixellation and choppy video is showing up specifically when I am writing into PAL DVD format from premier 11. I suspect there is a interlace setting somewhere that I am missing...
Does your project settings match the avi's.
I once made the misstake of putting pal footage into ntsc settings (as it always opens default in ntsc settings, annoying)
Try using Publish & Share/Computer/AVCHD with the preset for YouTube SD. Then play this file on your computer.
If what I'm saying about interlacing is correct, you should not see these lines in this MP4.