What are the best sequence settings in FCP 5 for exporting screen capture video footage?

I capture video footage of websites in order to showcase in a demo reel. Using Snapz Pro, the compression type I have found to have the best quality is H264. When I take this footage into FCP (v5.1.4), I choose DV NTSC 48khz for the sequence setting. If I then select H264 for the sequence compression type, when I go to render I get a 'Codec error.'
The only way I am able to render properly is by choosing DV NTSC 48khz for the sequence setting and DV/DVCPRO-NTSC as my sequence compression type. The problem with this though is I get a perfect picture in the Viewer, but the picture quality in the Canvas (and the subsequent exported video) is slightly blurred.
I've been trying to find a solution to this problem off and on for years. I've finally decided now to get to the bottom of the issue. If you can solve this one you are my hero!
Ted

Thanks for the suggestions. I've tried using DVCPRO HD in the past, but the picture quality of the captured screen footage turns out blurry. The only codecs I've found that provide a perfectly clear image are H264, Animation and Uncompressed 8-bit. The problem with the latter two is that video files lasting only a few seconds measure in the 100s of MBs. Working with files that large would slow my editing and rendering down to a non-workable length.
I just don't understand why I can't edit H264 video if my sequence codec is set to H264. The 'Codec error' I get is baffling.

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