H.246 (MPEG-4) versus .AVI? Which one should I use? What should I use for audio?

Hey guys, I'm fairly new to AAE. Actually, I've had the trial for only 8 days now. I just got a capture card so I could record BF3 gameplay on the Xbox 360. I've spent sometime doing missions and whatnot, recording gameplay, so I could bring it into AAE and edit it. Now I just heard that AAE is more compatible with MPEG-4 files than with .AVI files. I'm not sure about this, but I do know that when I RAM preview with .AVI files or MP3 files, the audio is always cutting in and out.
My question is, should I record and edit my gameplay with H.246 (MPEG-4) or should I be using .AVI files instead? What's important to me is the quality of the video, and how well it works with AAE (I don't want it to flicker in/out)
But also, what's the best audio file format? As in, best quality and compatibility, also I don't want audio being cut in/out when I preview it.
Thanks!

Use AVIs. H.264 is a compressed delivery format and not necessarily meant for editing. Same for you MP3 - AE is simply rubbish at dealing with them. Use WAV instead. Do a little reading here on this forum. These topics have been covered many times.
Mylenium

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