Improving video quality compatible with flash 7

[btween]

I've spent many hours trying to eliminate the very pixelated look that I get when importing a videoclip into a flash movie. if I import it using the flash 8 settings it look sgreat, but if I use the Sorenson Spark codec which is compatible with flash 7 players, I always get this pixelated look no matter what settings I try.

I know however that it is possible to get a much better quality flash video file because I've seen them.

I am importing a nice looking avi. What am I doing wrong?