How to fix this vieo distortion?

I've been trying to get into video making with Sony Vegas, specifically for games.
but whenever it comes to rendering, no matter what options I seem to select, I get this bad ghosting/horizontal lines at parts where there's movement.

It could be be the recorded footage itself, though I don't think it is. I'm using Fraps.
I'm rendering in .avi format with these codec settings with ffdshow codec.

Any advice as to how to fix this distortion would be greatly appreciated.

fraps could be the issue, try doing a raw recording from the game if you can instead.

thats interlacing, my boy. find anything that says "Interlacing" or even "De-Interlacing" and turn it da fuck awf. It will increase the file size pretty substantially (theoretically double the size) but quality will be mo' betta.

Yeah, I've wound up with 2 Gig 1 minute video files from Blender 3d, looks good though.