OK, I film using my Sony Handycam, that uses DVDs. I edit using Adobe Premiere, but it only lets me finish the film in WMV, which significantly decreases the quality. I try converting to AVI but the picture looks exactly he same. Is there a way can edit it and save it as AVI
Yeah, "Elements" is the simplified version. It might not support more advanced output features.
It probably DOES support output to DV in an .avi container. This will produce an enormous but relatively uncompressed video. Then you can take this DV video and encode it into whatever using some free software. I use StaxRip, which yields very high quality.