Xvid produces low quality results

Hey, I have my renders set at 1920 x 1080 and rendering as xvid with default encoding but this produces a low quality pixelated shot. How can I fix this? Also if I render as Avi Jpeg Premiere doesn’t read the file for some reason.

Thanks, Blendermonkey

What is the target for your videos?
Is it the final delivering format for for playing on TV from an USB stick or Youtube or Vimeo?
H.264 usually is a good choice that works well in most situations.