If your source is interlaced and your target is progressive then CS4 will automatically de-interlace.
If you can't get to the bottom of your problem, then export to a lossless intermediate format and then use the free Windows Media Encoder to convert it to WMV.
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Where can I get the Windows Media Encoder?
Or I could use Sorenson...
Unless the Windows Media Encoder gives me more options...
And is there any way to speed up exporting of an AVI?
I heard of it before, but never used it.
As with a lot of things, Google helped.
It is in middle of exporting now.
I hope the Progressive option for AVI works...