Editing custom frame size video - portrait/vertical VGA - 480 x 640

[PMESKA]

I am editing the video I capture off the marine radar. It has a VGA output, the picture that comes out of the device (which is not a computer, mind you) is oriented vertically. I use the product called VGA2USB by Epiphan Systems to capture the video into the computer. I capture it as uncompressed AVI files. 2 minites worth of video comes up to almost 3 GB of disk space.
I would like to edit these videos for posting on Youtube or as embedded videos on the company's website. Naturally I also want to compress these videos for e-mailing, etc.
I tried Sony Vegas and Pinnacle Ultimate Studio for trimming and text overlay.
I have 2 problems. Just about any codec, file format, etc result in significant deteriotation of quality, motion artifacts and loss of brightness.
Another problem is that both Sony and Pinnacle don't like to work with 480 x 640 and change it to something else - either by adding black background on the sides or by distorting the video altogether, that frame size doesn't seem to be supported.
I don't know if I gave enough background, but any advice would be much appreciated.

[guns1inger]

What do you plan to do with the output ?

Vegas should handle it, but you will have to change the project settings to match your frame size. As for choice of codec and quality - motion artefacts are usually a product of the bitrate being set too low, and loss of brightness may depend on how you are viewing the video.

[jagabo]

Vegas should handle it, but you will have to change the project settings to match your frame size.

And be sure you're using a template with fixed frame sizes, like DVD.