video editing problem (during rendering video quality deteriorates )

Ok my goal is to transfer a video tape on to my computer and use an editing program to splice and delete certain scenes, I have finished that but there is a problem..

One of the reasons I wanted to convert my tapes to VCD in the first place was to improve or at least maintain the quality.. but it seems the quality is perfect until the editing program (movie star 5) renders the video from a .MCL format to an MPEG2 format.. for whatever reason during this process the quality detioriates and parts of the scenes are left blocky.. to sum it up the quality is worse then before.. so is there another rendering program I can use to that would prevent this?? Thanks