Please tell us first about the complete settings of the Project Preset, and then your Assets in detail, both Video and any still images that you might have. Do you have Scale to Frame checked?
Next, let's go with that horrible H.264 Export/Share. What were the actual settings?
Also, there are three very popular H.264 CODEC's: Apple's, Lead's and MainConcept's. Some users have had major issues with Apple's, though not to the level of your description. Which one do you have installed? Most have had much better luck with the latter two.
Hey, thanks for supporting the book, Andy!
I'm just not sure I have quite enough information to help you out.
But this much I know: When you're saving as a WMV, MOV or FLV file, you're saving at a greatly reduced resolution. Possibly as low as 320x240. (I'm not sure which setting you're using, so I can't say.) That's only about 5% of the resolution of your original file, so it's no wonder it doesn't look very good.
I don't know what your goal is to output or how you plan to distribute it (computer file? BluRay disc? DVD?), but that will determine what output format to use and what resolution to set it at.
Meantime, if you want to see what a high quality MOV output looks like, try creating a custom output preset. Try 1920 x 1080 with square pixels.
As for the issues you're having with your photos, it's hard to say. I don't know what resolution your photos are, but optimizing your photo sizes definitely makes them perform better (and with less unpredictable results).
I'm not sure how your panarama turned into a bunch of individual pictures -- but I guess I'm assuming you created the panarama using PhotoMerge in Photoshop Elements and then saved it as a single JPEG. I'm not sure of another way to create a continuous panarama.
Anyway, hope that gets you started. If you can post a sample of your video and then link your response to it, we can have a look at it and maybe then offer more insight.