Sony DCR-SR35 File Format Help

Can anyone help?!

I have filmed footage on a sony DCR-SR35 which uses a hard drive. After moving the files (which are .MPG) onto my Mac, all the video has distorting horizontal lines whenever something moves. I've checked some forums and they suggest converting to DV to get rid of the lines and make it easier to edit.

Problem 1:
Compressor won't seem to convert these files to DV. It just says 'fail' every time. It will compress them to other formats but not DV.

Another way of importing the files is using iMovie (this recognizes the camera but Final Cut doesn't). After importing the video using iMovie, the files are .mov and the lines are gone.

Problem 2:
these .mov files play the correct aspect ratio in Quicktime and iMovie (16:9 which is what they were filmed and imported at) but when imported into Final Cut, they are 4:3 with black panels on the side that fills in the rest of the 16:9 space. It won't let me change the properties of the file in Final Cut and changing the sequence settings does nothing.

Basically I have lots of footage and no way of getting rid of these stupid lines. And if the lines are gone, the aspect ratio messes up.

Here is a link to an image of the lines i'm talking about

http://www.jackwhale.com/images/home/lines.png

Thanks