Use Media Studio myself.

The first thing to note is how MSPro handles JPegs. It will simply stretch them to fit the screen. Therefore if the original Jpeg is the same size as the video screen (720x576 PAL) then there is less compression to be done later.

There is a greater chance of jerkiness (frame drops?) when using Jpegs because the software has to encode this. Doesn't have to for the rest of your movie if this was originally captured in AVI.

Therfore I'd still be tempted to defrag both your drives.

Good luck!