Lagarith Video Quality Help

[The Shogun]

Hey guys I need a bit of help, I'm currently doing a MEP and Im on Sony Vegas7, I have my parts done but I'm using the .vob from dvd's instead of avi's I figured I would lose quality this way but when I render my part it looks bad, I have everything I can put to high quality but my segments aren't getting there can anyone help me out?