I had this problem when I first started working with Camtasia captures. I believe Camtasia and Snagit are made by the same company.
I found that Camtasia captures in Square Pixels (1.0) while usual DV projects are done with 0.9 pixels. The result is that the pixels are distorted by about 10% when you export the new video. Remember, the computer resolution and method of creating a screen picture is completely different from that of a television screen. Another issue was that Camtasia was capturing at 15fps while I was exporting in 29.97fps. This meant that Premiere had to guess at what 50% of the frames were supposed to look like and then create those frames. That diminished the quality as well.
Try opening a new project, but before you assign a name and location, change the settings. In the list of available presets Click on Mobile and Devices>iPod, QVGA, Sub-QCIF. Then click above on the "Custom Settings" tab. Change the timebase to equal the framerate of your capture. I recommend creating your capture at 30fps and making Premiere match that. Frame size should probably be 640x480 unless you have specific needs for a different size. 720x480 generally doesn't work because of the whole square pixel issue. Pixel Aspect Ratio - Square Pixels (1.0). No Fields Progressive Scan. Display Format - kind of up to you but I recommend 30fps timecode because that's probably what you're used to looking at.
Save that Preset as "Snagit" or something like that so you can use it again in the future.
Now, I've found that the avi that I export with this setting tends to only play audio in Media Player. However, When I convert this avi to a WMV using Media Encoder, it comes out very high quality.
Ok, to summarize - the problems are most likely a result of pulling a square pixel avi into a 0.9 pixel project and exporting at a higher framerate than the original video was captured in.
I've never posted here before and I'm not an expert (just a user) so if I've done something wrong, please kindly correct me.
Thanks for that helpful tidbit. I have figured out a way to do it, and you're on the right track.
First, I had "deinterlace" checked, when in fact it should not be. Secondly, frame rate and pixel ratio had something to do with it. By playing around with settings a bit more, I was able to sufficiently export the avi without sacrificing quality.
Thanks to both of you for your help!