Lewis,
You need record your video at the highest level that your system can handle without stuttering. This will ensure your video is at the highest quality-level before compressing it for upload. By doing this, there is less loss, meaning less distortion.
I recommend that you look into a program such as Pinnacle Studio. I was able to upgrade from an ancient license we had for about $50.00 US. I don't know what the current version is, or the price, but I do know the program is much more reliable than Windows Live Movie Maker, which burned me badly when I used it for a school project. At the very last minute, the program would freeze as I was burning some video clips I put together for my Comparative Arts Class! The program went as far as to freeze up my system, forcing me to reboot it.
Here are some video clips I put together last year using Pinnacle Studio. They were recorded at HiDef, and then down-sampled for upload. The final video format was MPEG-4, which plays back very nicely.
http://www.youtube.com/watch?v=JIPmA2MpqIM
http://www.youtube.com/watch?v=vgtlegPEv3c
http://www.youtube.com/watch?v=A1Jp9_u8wH4
http://www.youtube.com/watch?v=msGXNeqjJNg
They're not rail or Trainz related, but only to show you the video quality. With Pinnacle, you can adjust the video size and compression levels so you can achieve the best-quality along with the video format. This is unlike WMM, which only locks you into the WMV format, which really doesn't compress down well.
Nero and Roxio, which were once my gold standards, gave me a hard time a few years ago. Roxio gave me a hard time when I had to reinstall it. They treated me like a criminal, and Nero was heavy on my system with all the services.
Today I use a free CD/DVD burner called ImageBurn, which is available from
www.downloads.com This program is easy to use, and works on virtually all versions of Windows, including Windows NT 4.0!
John