There used to be sony movie maker for under $80 which was a sort of cut down Vegas.

try http://www.sonycreativesoftware.com/moviestudiohd  under $50

Theres free stuff like Tmpgenc but try www.videohelp.com tools section.

 

any video editor is going to mess your pics unless you render at the correct frame size to start with.  xvid, divx and the windows movie maker codec are fairly good for compression and image quality.