Problems capturing DV to mpeg-2 using PowerDirector 3

Archived from groups: rec.video.desktop (More info?)

I recently purchased PowerDirector 3 to capture from DV camcorder and
create mpeg files. The quality of mpeg-2 file are very poor with
dithering small squares obscuring the picture. Mpeg-1 files are better
but still poor. Using avi files works fine but the files are huge. I
run an Athlon 1.4G processor on an Asus A7V8X-X mother board with 768M
of RAM and have plenty of disk space. Does this sound like a processor
speed problem?