When you say that your project settings are PAL-DVD-Standard, do you mean that, when you started your project you went to Settings and selected the PAL Hard Disk/Flash Memory Camcorder settings for Standard video?
How did you get your video from your DVD into your Premiere Elements project? Did you put the disk in your computer's drive and use Premiere Elements' Get Media/From DVD Camcorder or PCDVD Drive to rip the files?
Did you change any other settings or apply any Field Options or de-interlacing?
Is the DVD a PAL DVD and did you output to a PAL MPEG?
I opened a ‘New Project’ and selected Project Settings: PAL-DV-Standard 48kHz. I imported the files into Premiere as .VOB files. This was the file extension on the original DVD files when loaded onto my PC. I used the Get Media button to import the files from a folder on my PC.
It was a PAL DVD and the output was to a PAL MPEG?
The problem is that you used the wrong settings when you created your project which is causing an interlacing conflict. In the future, if you use the project settings I recommended above, you won't have this problem.
Meantime, short of restarting your project, your only solution is to right-click on each clip on your timeline, select Field Options and check the option to Reverse Field Order. (When you use the Hard Disk/Flash Drive Camcorder settings, the program does this automatically.)
If you manually change this setting for every clip on your timeline and then re-output your movie, your problem will go away.
If you'd like more information on setting up projects and how to avoid these kinds of issues, check out my books, available on Amazon and at Premiere Elements support site Muvipix.com.
Steve has given you the steps, and also the why, for choosing the proper Project Preset.
Now, why the playback of a Rendered Timeline is smooth, but the Export/Share is not, here is a bit of background.
When you Import an Asset (the MPEG in this case), PrE will try its best to give you a decent display of the Timeline. When one Renders the Timeline for smoothest playback, PrE creates a set of AVI files, that are linked to the Timeline. They are what you actually see on Playback.
When you then Export/Share, PrE will read the data from your original Assets (they are never actually in your Project, just some links to them), interpret that data by the Project Preset, plus any instructions that you given the program, like Cuts, Transitions, Effects, etc, and then process all this through the settings for Export/Share.
Another consideration is that you are starting with MPEG material, that has been compressed. When you Export/Share to any compressed CODEC, you will re-compress that footage, so it will never be quite as good as, or any better than, the original footage. Steve's tips get you as close as you can get, and will eliminate other issues.
Many thaks for your help on this matter. I think i'll start-over.