I'm inserting an image into my video. When I export the video to wmv, the image becomes pixelated. I'm using a high resoluation image. And I'm exporting it at a high video resolution.
Screenblast is rather limited in the number of settings you can use to create your WMV.
One option may be to save your movie as an AVI and them place it in MovieMaker (a free download for Windows XP). From there you have a wide variety of WMV quality settings.
Instead of using windows movie maker 2 to convert it, he might try windows media encoder, another free download. I have found this to work better for me for the quality. When I have taken something that I rendered to an AVI into WMM, the text screens came out very choppy.