Not sure if this is it, but I recently discovered you can't really play with the picture quality settings too much when using digital terrestrial, because it's already encoded in MPEGII format, meaning MCe doesn't bother doing anything other than saving the feed as a file.
I don't think comparing Sky to Freeview is really all that good a comparison. Freeview is for the time being using a small amount of over the air bandwidth, shared with analogue terrestrial, whereas Sky has it's own dedicated signal so the same channel may be getting broadcast at a higher or lower bitrate depending on what medium it's being broadcast on.
I've noticed there is some digital artefacting on Freeview, both over set to boxes and my own Black Gold DVB-T card in my MCE machine.
As far as I'm aware, there is very little you can do about it, because it's down to the way it's broadcast. Until they turn off analogue in 2007-2012 you won't get as great a picture as Sky I'd say.
However in saying that, there is a registry entry somewhere on the green button forums, here:
http://www.thegreenbutton.com/commun...essageID=97920
I tinkered with it a little and wasn't sure if I saw am improvement. Give it a shot, just change it back if you don't see any difference
