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Are you using the "Render Queue" or the "File>Export" function? It's possible that you're rendering/exporting out a compressed version of your footage that is causing it to lose quality. Check out the online help for information on rendering:
Looks about normal for AVIs ;) I kid! I kid!
Looks like whatever codec you picked for your AVI is clamping it down to 256 colors (or less). It looks very Cinepaky or Indeo-ish. What codec are you using?
As the others already mentioned, check how you are rendering the composition. The only AVI CoDec bundled with Windows that does not ruin your colors is Uncompressed. All others do damage and unfortunately on Windows systems the default presets use them, so if you don't do anything about it, it will naturally ruin your output more or less. If you are merely interested in desktop playback, use WMV. If you want to keep your files editable, look into downloading some third-party CoDecs e.g. from Blackmagic. Otherwise simply switch to Quicktime. It's much less trouble and offers a wider selection of suitable CoDecs.