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Saving a Project is a different matter than "saving" the "video".
You save the Project you are working on(as an aep). This is the workfile and includes the media, timelines, comps and the fx etc.
Saving the "video" - or rendering the video - is outputing/exporting the Project to a new video.
Pixelation and distortion issues will most likely be that you have not chosen a suitable export module and quality settings.
thats what I meant by exporting the video, I'm doing the AVI settings, Cineak compression, best quality, millions of colours, and the best I'm about to get is setting the frames per second to 25, and the kbps to 1008. Any suggestions on how to save it as better quality?
Cinepak is an ancient and horrible codec. What codec does your camcorder footage use? If your goal is to record AE renders straight back to tape, you should aim to match the specs of your camcorder footage - DV, perhaps?
.AVI, Lossless Setting (ie No Compressor)
thanks guys, this really helped!