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Most likely this is a file that was not designed for editing, something you got off the web or some place other than captured from a pro level camera. Is that true?
Jim, your instincts are correct. The file started as a home VHS (old family events) recorded to a Panasonic DVD (unprotected) recorder and converted to AVI with a program Adobe recomends called MPEG Streamclip. I realize Streamclip is probably the culprit here, but if I know why maybe I could fix it. Thanks for the reply. I was hoping someone had seen this before and had a workaround.
You will obtain a better source clip if you can capture it again, more directly, directly to Type 2 DV-AVI. VHS is not great to start with, but converting that to MPEG2 (DVD recording) compresses whatever is left of the signal, further. Then attempting to convert it yet again to DV can reeaally degrade the video signal. Capturing the VHS again, thru a digital conversion device (Pyro or equivalent) or using the passthru conversion of a cheap mini-DV camera will achieve much better results. With VHS as the source, you really need to minimize generational/compression loss.