When you create your final video you could try apply anti-flickering filter. Forgive me, but I am using Video Studio 8 but the steps should be similar in v7,
1. Click the Share TAB
2. Select the appropriate format type
3. Click the 'Options' button
4. Make sure the 'Apply Anti-flickering filter' checkbox is checked (ie a green tick in the box)
5. Give your movie a name and save to the folder of your choice.
6. Enjoy
Hope that is of some help. I think your only other option is to de-interlace the video still at the capture stage, but you haven't mentioned the method use for grabbing the still.