. I have finally manged to solve this greatly irritating problem. In case this happens to anyone else I'll write down what I did. Any questions, PM me or send an e-mail. What you really should do is read ADM's guide on editing, located on this forum.Programs used: DGIndex, Gordian Knot, VirtualDubMod, TMPGEnc.
What I did:
1. First I used DGIndex to create a .d2v file for a .vob that I had ripped using DVD Shrink. In my case, perhaps 2/5 of the movie needed to be re-captured so I set DGIndex to only save that particular part.
2. I loaded the .d2v file in Gordian Knot and fixed the settings to be correct for the project (PAL, anamorphic and stuff like that). Then, in the window showing the video, I saved it all as an .avs file.
3. Since I couldn't get the output resolution right in GKnot I had to open the .avs file in notepad to change this to correct value for this project (720x576)
4. I opened up VirtualDubMod and there I opened the .avs file. All I had to do here was to save the file as an .avi (uncompressed of course). Only problem here is that these kind of files take up a huge amount of HD space. As I said, about 2/5 of the movie needed to be re-captured, and after encoding the .avi I ended up with a 92GB file! Luckily I have an external, very big HD for all my film work so I managed this.
5. Now I opened TMPGEnc and loaded my 92 Gig .avi. I changed all the settings to be correct for this project and then allowed it to encode an .m2v file. I was a little afraid that the blockiness would reappear here since I had just taken a detour creating the same type of file I already had in premiere. I was very happy to see that this didn't happen.
6. In Premiere, I imported the file in my project and we've lived happily together ever after. The End.
Thank you for your help everyone, you make a newcomer feel very welcome.