Poor quality when exporting HD project directly from Final cut Express

I am doing some HD projects in Final Cut Express HD. I filmed with the Sony HRD-HC1 in 1080i. I import into FCE using the 1080i 60 preset from Easy setup. I completed the project and it looks great from FCE full screen. I export as Quicktime (not Using Quicktime conversion), and I get a perfect looking output file using the Apple intermediate codec, 1440x1080. The problem is that the client needs to play back the video on windows machine using Quicktime. The windows Quicktime does not support the AIC apple intermediate codec, so I have to export to another format. I tried everything exporting from FCE, MP2, H.264, DivX, everyone option. They all look terrible. Blurry, especially parts that have quick motion. Really terrible. I called Apple support, no love. I then tried taking the AIC version of the file and used compressor. It took forever, but came up with am OK MP2 HD file. It still doesn't look that great, but it is way better. So, is their something broken with the FCE exports using Quicktime conversion? Anyone have similar experiences or workarounds? I don't want to use compressor as I don't have it on my Mac Book pro, I had to move it to another machine to do that.

Being that the dimentions you suggested should be widescreen, I re-ran the conversion to your parameters, this time un-checking "Preserve aspsect ratio.. as letterbox" and this time it is widescreen. Not sure why, but it was putting the black bars on the left and right, not the top and bottom, scrunching to 4:3ish with that box checked. Strange.
Anyway, the quality is the best H.264 I have seen exporting directly from FCE. It still blurs quite a bit on the fast moving video parts, my MP2 version from compressor still looks lots better. Seems like there is some problem with exporting HD from FCE. It just is not coming out sharp, like the Apple intermediate codec version you get with Export - -> Quicktime movie or if you wait for compressor to do the work rather than FCE. Does compressor use a different engine, or does it use the same QT and just take more time to do a better job in the export? Something just isn't right.

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http://www.locationstudio.net/Settings.jpg
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Poor quality when exporting HD project directly from Final cut Express

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