Everything was good until I did this part for the Interlaced video "we are going to take care of that by right clicking the video file on the Timeline, selecting Field Order, and then Reverse Field Dominance"
Once I did it showed an orange line and everything looked pixelated again.
So I rendered the clips and it did not get any better. Also went ahead and did a Menu with the instruction you gave and went ahead and burned a disc and the whole thing was pixelated.
The Space Required and Bitrate stated 2.45 GB(Bitrate 8.00Mbps).