Ive tried converting a few avi films, downloaded from the donkey such as Harry Potter 2 but i'm getting a sort of comb effect around the edges of object etc.

What am i doing wrong here?
Most films are NTSC 23fps

Here are the settings i use:

Video source non-interlace
source aspect ratio 1:1

Frame rate 23.976 (internally 29.97)
Video format NTSC
Encode mode 3:2 pulldown
aspect ratio 1:1

Are most avi's non-interlaced?

Can anybody see a problem here?