Not sure if this is your problem but it might explain the pixeling effect: I think I read somewhere that Pinnacle Studio 9 manages to provide a full-screen playback in realtime within the software by increasing the size of the window and decreasing the resolution. I'm not familiar with the software but if it does it this way you'll be seeing a relatively low-res full-screen preview.
Try exporting the project as full quality AVI and then playing it back in Windows Media Player, if it's still pixely then this isn't your problem. But it might be worth checking out.
Panasonic SD9, Panasonic NVGS-75, Canon MV600i