It's probably not a codec issue. You seem to be using a pretty good workflow.
It could be that this is a pro camcorder that shoots in 60i, which Premiere Elements may be having some problems completely digesting. (Premiere CS5 would be a much better editing tool in this case.) Or it could be just some interlacing you're seeing on your computer.
It's strange that you describe it as a "pixelation" issue -- meaning that it looks low resolution. I have no idea what could be causing that! There's no reason that should be happening with your current workflow.
Thanks for replying so fast... I am going to ty to get a version for Vimeo online so that you guys can see, i might have the wrong terminology in describing the issue. It's kind of a big file so it is going to take some time to get it uploaded, I'll post a link when it is done.
Here is the exported video on Vemio
I have tried to activate this for you to view, I have the privacy setting set correctly, but it just doesn't seem to want to import, so here is the link: http://www.vimeo.com/13832345
It looks as horrible on the hard drive as it does on Vimeo?
What you are seeing is just a compression issue.
Video compresses by re-using as much pixel data as possible. However, when you've got a lot of detail and motion, it can't do a lot of compression.
So, when you use a highly compressed format, such as MP4, this issue is magnified. In other words, with that kind of detailed movement, it's unlikely you can improve it without increasing the quality level in the Advanced settings -- which will mean a much bigger file and kind of defeats the purpose of using H.264/MP4 compression.
I understand this is due to compression, it's no different than compressing a 25mb raw .NEF (Nikon) file to a usable JPEG file for the web. However, I see video online all the time with "lots of movement" and their videos look great. Back to the CODEC thing... The codec is what actually does the compression, right? Also, if I can get a HD file on the hard drive from PRE8 then I can use all kinds of converters to convert/compress the file for different platforms. What I can't seem to do is get PRE8 to give me an acceptable file to start with? What seems really simple, is becoming a serious pain int he butt!
If you're planning to do compression outside of PRE then export as MPEG2 Blu-Ray. If that still isn't good enough you can also increase the default bit-rate.
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that is what I needed! I ran a test on a short piece, the first two scenes, and it worked great. I am processing the full length and we'll what size it turns out to be. Thanks to the both of you for the help.