Hello,
PE4 works better with AVI than MPEG/VOB.
You basically want to export as either DV-NTSC or DV-PAL AVI (depending on the broadcast standard in your country of origin). In North America it is NTSC. The other default settings in the tool should be fine.
The resulting AVI files will be about four times bigger than your camera's VOB files.
Zam
Digital Video and Film