Whenever I do pans the picture quality has jagged lines in it and was not smooth compared to the same M2t files. Maybe my setting are wrong in NeoScene. I have it set to quality high. Currently I am using the demo before I purchase the program. I am watching the AVI file with Windows Media player and the m2t files I am using a power dvd.
Thoughts?

You display tools are using are not going to get you the best feedback. Download VirtualDub and load you AVI into that, that will not deinterlace or other things your graphic card can do automatically. If is looks correct in VirtualDub you can be confident that all your output based on that source will be good. If it doesn't then contact support.

What are the best settings when downloading from my camera?

Thanks again David.

Use NeoScene to capture and real-time convert directly from you camera.