I downloaded the Birth of Vader clip, but to be honest I couldn't get past the video quality. A 170meg clip that's under 3 minutes in length shouldn't look that bad. What software do you use to edit, and what did you use to convert it to WMV?
I suspect, given the size of the file, that you rendered it out in WMV. If you use Vegas to edit, I suggest that you render as an MPEG4 with Mainconcept AVC, which will produce a huge file, roughly 50 gigs for a full movie. If you have a huge amount of hard drive space you could even render it as an AVI with the Lagarith codec (a lossless codec), but the file will be 100 gigs or so. Then use either Vidcoder or MeGUI to convert it down to a manageable sized MP4 or MKV.
Also, make sure you match the specs of the output to the input. Going by memory I think your video was 1440x1000. That doesn't make sense to me. If it's from DVD it will probably be 720x480, or blu-ray 1920x1080 or 1280x720. Lastly, make certain the frame rate of your render matches the input frame rate - that's absolutely vital.
Please don't be dispirited by this post. We were all newbies once (some of us still are) :)