Instead of just guessing a format, please share with us what the delivery requirement is. Is this for Web, for DVD, PC, other?
If its for web, flash is the most common format. If thats the case, choose a preset and use it stock; then just tweek as needed.
The most common problem with screen scraping videos is they are captured at high res and high frame rate. That combination creates a huge file. OR a smaller file with really bad quality.
Remember SD video is only 640 x 480. So trying to streem a 1400 x 1000 video is quite large and if you compress it to a small file size it will look very bad.
So; to make it smaller file size, make the frame size smaller (800 x X) and consider making the frame Rate lower. Most screen scrapers can get by with 10 or 15 FPS. This will save gobs of BW.
So; choose a high quality flv preset; change the dim to 800 x or smaller; chamge the fps to 10 fps and export.
Tip: Export just a few seconds to test. If its still blurry; you can add BW or reduce frame size dim. Tweek until you reach the quality vs file size that suits you.
Going along with experimenting and 'export a few seconds to test'; if you're still getting blurry problems, try extremes to help deduce and zero in what the problem really is.
Export (twice) to a flv and mp4 with maximum bitrate. Do each format twice, as well--one at original resolution, one at desired resolution. Maybe do one even smaller, at 400px wide. See what happens.
From these tests, you can deduce (a) whether it's one of these specific formats giving you the problem (b) whether or not it's the scale down that's giving you the problem. And if they all come out clear, maybe (c) it's a bitrate problem you're running into.
If none of this work, I would encourage you to try totally different formats that may not even be your target. Try various mpeg and avi and mov exports. See if any other them get rid of the 'blur'.
My ultimate fall back has always been "quicktime none". That is, a mov export, with the compression setting inside the quicktime dialogue at "none". Sometimes I run into color grading issues, for example, that will seemingly only be preserved full quality at this specific codec setting. So if somethings having issues like sharp image coming out blurry, I export a quicktime none to see if something bigger is broken. If it does, perhaps something is wrong with Premiere or Media Encoder.
There is the one and only filter option in your Media Encoder that is "Gaussian Blur". Maybe that got turned on somehow.
p.s. for the record, I've found media encoder's FLV export is superb in terms of preserving sharpness. I often do 1080i edits, inside of a SD 720x480 project/sequence, which are then brought down to 545x306 via media encoder for integration directly on client's websites. I've played, very extensively, with quicktime .mov .mp4 formats, and they always come out softer than the flv or f4v exports. If you didn't have a side by side comparison, you wouldn't know, so FCS guys think their exports look just fine, but it drives me nuts. I've had the same result straight out of final cut using compressor--can't find a setting that works "properly". So I end up exporting out uncompressed, bringing it into Media Encoder, and doing the magic there. The only problem is I can't seem to get FLV to export full 0-255 colors, which sucks big time.
Point being, I don't think it's the format or scaling that is giving you the problem.