I routinely use AVCHD from a Panny videocam as well a Sony dSLR with VMS11 and 12. I run Vista 32 bit with a GT 240 as well.

When you say playback, is that in the preview window or after rendering?

What format of AVCHD are you using...Is it 1920x1080, 60i? What do you mean when you say aliasing...Do you really mean you see interlacing artifacts?

Are you previewing on a computer monitor? If you right click on the preview window, preview device options, is apply deinterlace checked?

Aliasing the wrong word. Its more of a shimmer where all the pixels are moving .A screen shot wont really give you an idea as it's hard to see the artifact when the image is still. I turned off GPU and that has worked to clear it up by 90%. then i changed preview to Good(half) and its looking 100% now. The export always looked fine. So time for a new graphics card then. Thanks for assistance.

It was only preview. So i've done tests with the suggestions i've received. In the above reply i turned off GPU and adjusted previwe to Good(auto) and that solved it. I also have turned on GPU and checked deinterlace as you suggested , set preview to Preview(full) and that has also solved it . So i'll leave as is with GPU on. Thanks very much for assistance.

Checked deinterlace on GH1 footage?!? GH1 can produce only progressive picture. By deinterlacing the picture you might decrease picture quality (resolution). However, VMS is always oroducing artifacts when importing raw GH1 footage. Even marking the footage as progressive does not help. Similar happens with some orther editors, unfortunately.

I am usually importing GH1 footage to VirtualDub (by avisynth script) and then exporting it by using some higher-quality codec. Then I use it in VMS.

Crunchy, doesn't GH1 record 1280x720 progressive and 1920x1080 interlaced?

No. It records in progressive mode, but it "wraps" such picture into interlaced format. The picture is not interlaced, it is just written as interlaced.
GH2 is slightly different, since it also offers real interlaced picture.

If editing softwares would be such as they should be, you would click on the clip, mark it as progressive, and then you would edit it as you shoud. However, this does not work (VMS is not the only SW which has such problems) properly. Whatever you do you'll get chroma upsampling error and somehow lower colour resolution. The only solution to have perfect picture in VMS is to transcode the clip into some other near loseless format (as described before) and then use it in VMS or some other SW.

Even GH2 suffers from similar problems even though some formats are also written (to a file) in progressive mode. The solution is similar.

I used to use a Canon and would convert via Mpeg streamclip but was under the impression that Vegas handled the GH1 files pretty good. So I should uncheck deinterlace and convert using Virtualdub then . What format do you convert to ? Do you use different export formats for AVCHD and MJpeg ?

I'm using the hacked GH1 so will this change your suggestion ?

i unchecked the deinterace option and playback is great. All along it was the playback setting