What video card/graphics card does your computer use? If you are in a Premiere Elements 10/NVIDIA GeForce situation, that may be the problem.
What type of .avi are you using? AVI is just a file extension (wrapper/container format).
If you do not know, please consider downloading loading and installing the free codec utility named GSpot.
Lots of ways to go on this
a. Is the blur in the preview and in playback of the export?
b. Playback Quality = Automatic or Highest (see right click on monitor, selection of Playback Quality)
c. Edit Menu/Preferences/General - Timeline Render Quality setting
d. Timeline rendered or unrender at playback in Edit area monitor?
e. Does project preset match properties of source media?
Please review, consider, and supply more information to help us help you.
I don't know what type of AVI file it is, I made this file about 15 years ago. I'll try and download the Codec later when I get home, what is that going to do?
As soon as I bring the file into Premiere it is blurry in the preview window. I just changed Playback Quality to Highest and it didn't get any better. It is blurry as soon as I bring it into Premiere. I have already re-saved one of the renderings and there were black "splotches" that appeared during some of the video playback.
I went to the EDIT menu/Preferences/General and I can't find any Timeline Rendering Quality setting. Can you be more specific?
where do I change the Timeline rendered or unrendered at playback in Edit area monitor?
Where do I check to see if the project presets match properties of source media?
It has been a while since I have used Premiere and if you don't use it you lose it.
The way I originally made this file was I saved each individual frame using 3D Studio Max (Release 7ish) and then put the entire thing back together by adding the frames that I wanted from 2 different camera point-of-view. The video likes pretty good when I run it in any viewer but as soon as I drop it into Premiere to cut it and add a couple frames it gets very blurry right from the start. I hope this helps.
What video compression is being used with the .avi file extension (wrapper/container format) is important to the troubleshooting.
So, please see what you can put together for that information from the codec utility GSpot which might tell us the video compression but along with that a statement on whether the video codec is considered installed, not installed, or undefined.
Timeline Rendering Quality in Edit Menu/Preferences/General
My oversight on that one - there is no Timeline Rendering Quality in Edit Menu/Preferences/General or anywhere else in Premiere Elements 10. That preference did not arrive in Premiere Elements until version 11.
Recently there have been some threads here with previewing issues what were not seen in the end product.
Have you taken your Timeline (blur and all) to export and seen the same problem in the export that you saw in previewing before export?