The jagged lines of camera motion are well known

they may come from interlacing avi/ mpeg and or motion mpeg artifacts.
You have not said what you play in media player to get them and whether ore not they carry on to wathching tham on a TV display:
Have you seen any of these jagges in a DVD played thru a TV??
The "cure" for motion artifacts with mpegs is to increase the encoding bitrate. try this with short segments to see if it makes a difference
DV Storm is extremely powerful and was ( still is) well thought of in its hey day.Its real time hardware mpeg encoding was superb. It has since been replaced by Edius range. A lot of software solutions (ie Procoder on a nippy system) are not that less capable now.
If you have the FX1 wouldnt it be better to look toward stuff that can edit HD?
Do you downconvert the FX1s' HDV to SD for capture on the PC?