Well, you've used my normal first to suggestions: Quality Highest (try also Automatic to see if it's better), and 100% - where I normally have my magnification set.
Next, is there a red line above your Clips, just below the Timeline Ruler? If red, Render (Enter key) to turn that green. Does that help?
Next, check your Hardware Acceleration. If it's set to Max, back off and test. This can require a bit of experimentation to find the right amount, or perhaps none.
Next, check your OpenGL settings. These can have pretty major effects on the quality of the material in the Program Monitor.
If you have an nVidia card, with recent drivers, look in the iNvidia console for PsychX and 3D Stereovision. If they are ON, turn them OFF.
If you have not updated your video driver very recently, please do so and test, but if iNvidia, see above.
That your FW monitor shows good results/quality, indicates that it's something in the display in the Program Monitor and likely a setting someplace - not your footage, which is a very good thing.
Good luck, and please report your success,
Set it to 'fit'.
This all plays out perfectly to an external monitor.
Then don't worry about it. Premiere's built-in monitors are for content monitoring only. Always use a properly calibrated external TV for quality control.
I get this too but have learned to live with it because it does not effect the output quality
Yes, the Program Monitor is rather like Preview in Encore - an emulation. Usually, it's pretty good, but a FW (or specialized vid-card) attached calibrated monitor is far, far better.
I know this is a rather old post, but In case anyone was searching for an answer....I think I found it:
Most likely you are dealing with interlaced footage. Right click on the Playback window, go down to "Fields", check "Display Both Fields".
If its progressive footage, the option wont be there, but Ive noticed progressive footage always looks crisp.