Steve -- he is actually recording footage from a PS3 -- PlayStation 3 console -- using a Hauppage box to convert video signals (via the component leads) to AVCHD.

http://www.amazon.com/Hauppauge-1212-Definition-Personal-Recorder/dp/B0018LX0DY

Hansel -- I have no experience with a PS3, but the 1280x720 vidcap images you posted indicate your PS3 is set up for "720p" mode. 720p is indeed 60 frames per second, not 30. The "blurred" image you posted is actually two separate frames blended together. I'm guessing you have a 30p or 60i project set up in VMS (i.e. 29.997). In essence, in every 1/30th of a second frame of video in your project timeline you have two 1/60th of a second images from your source file.

If VMS allows it, set your project properties to "HD 720-60p" (or 720-50p if you are outside the US). It looks like this 60p capability may have been added in VMS 11 and might not be available in VMS 10.

If you don't have 60p available, then on your timeline, try right-clicking on your clip, select Switches, then select "Disable Resample" and see if this helps. I think this will use only every other frame of your captured video instead of combining two 60p frames into every 30p frame on the timeline.

(Note: VMS doesn't automatically match your project's frame rate to your source video frame rate. For example, you could set up a 24p VMS project and bring 60p video files into it. By default, VMS will combine multiple frames from a "faster" source file to create a single frame in a "slower" project file.)

You could also try setting your project properties so that "De-interlace Method" is set to "Interpolate Fields".

I'm just guessing at these things since I don't have any direct experience. Please let us know what works or doesn't work.

Right-click on your video events, choose Switches, then Disable Resample.
That should take care of a lot of what you are seeing.

Thanks for the detailed response! I'm trying the disable resample option now. I guess I didn't fully understand that video capture framerate is independent of game render framerate. I didn't see an option for 720p-60 frames even in advanced render options. There is Blu-ray 1080 60i but I don't want to upsample because that would lower fidelity as well. I suppose if these solutions don't help I could upgrade to VMS11 if it indeed has 720p-60 capability.

You don't need to upgrade to get frame rate support. You simply edit the frame rate fields on both project properties and exporting dialogs to match the exact frame rate of the original footage. You don't have to use ready-made templates for it. As long as the frame rate matches the original footage in all steps of post processing, you won't get ghosting. In that case, you will only get ghosting if you slow-motion your footage, and that's easily gone by disabling resample.

Well disabling resample works much better for clarity, but in some cases the footage is half as smooth; obviously because of the missing frame, mainly noticeable when the game engine itself is rendering at 60fps vs 30.

Eugenia, I tried saving a custom option for a 59.940fps export to match the original footage/project settings, but it still saves under the default 1280x720p - 30fps heading. We'll see if it works.

Export dialogues is simply the "make a movie' tab render options, correct?

*edit* Video rendered much smoother so it appears the custom setting worked! No noticeable loss in quality either, which is a bit surprising considering the file size doesn't appear to be any larger than if it were a 30fps render. But I confirmed it did render 60fps by dividing total frames by the total time. And like I said the playback is undoubtedly smoother. Definitely a relief it has the ability to do this as it saves me the frustration and money.

Thanks for the help!