I think I found some solution to my problem, I will render an AVI file (uncompressed or M-JPEG), and then encode it to MPEG-2 with TMPGEnc. I'm gonna try this now, and see if it works.
But even if it does work, I still don't know what the problem is with the Pinnacle software and I would eventually want to fix it so that I can author in this all-in-one solution (besides being uncomfortable, TMPGEnc trial version for MPEG-2 encoding is only available for 30 days)!