OK, i created 2 motion backgrounds in AE for 2 motion menus in exact the same way, the same field order for my DVD (I am really familiar with field orders since I am doing that for years).

But... In Encore I leave one motion background untouched and on another I put "Play All" button from Encore. So, Menu 1 does not need rendering within Encore and Menu 2 needs rendering within Encore.

When I play back those menus on TV, Menu 1 is perfect but Menu 2 has interlaced artifacts like filed order is wrong (or Menu 2 is progressively rendered). I read somewhere that Encore is NOT able to render menus interlaced but only progressive. Can somebody confirm that? Can somebody test this situation?

Please advise. I am using Encore CS3 version.

OK, I noticed described issue only if my video background is exported as MPEG-2 (.m2v) files. If I export my video background to DV file and after it is rendered in Encore, movie looks good INDEPENDENT of fields order in DV file (I tried both, UFF DV and BFF DV).

Really strange that problem occurs on .m2v MPEG-2 files which should be MUST for DVD creation.

DV is always BFF, if DV is rendered to mpeg you keep the Bottom Field.
You don't have interlaced artifacts when the fields are set wrong.
When fields are set wrong you usually get jumpy video.
Interlaced artifacts occur when you have horizontal detail (or sometimes vertical detial, moire effect) which are narrower than a horizontal videoline (have no idea what you call that in English.)
Deinterlace the footage that is used for the menu or give it a slight blur.

I've just wanted to stress out that rendered DV material as motion background independent is it BFF or UFF, Encore encodes it correctly. MPEG-2 material is not rendered correctly and in ProCoder I can set ONLY UFF which DON'T cause problems in normal playback but only on rendered background. And I didn't see options within Encore to set render options (bitrate, fields, etc.). Transcode options are not render options unfortunately.

Go to file/edit quality presets. That will give you all the options.
Mpeg is usually upper field, but when converting dv avi into mpeg it must be set to lower field.

This is the problem. Settings within edit/quality presets does not have any impact for motion menu rendering.

Have you tried the motion menu in progressive?

I want that motion background is interlaced because of CRT TVs on which it will be played. Interlaced picture has smooth motions in comparison to progressive motions. I am really surprised that Encore doesn't have options for menu rendering.

If you can't get ProCoder to output Lower Field First files, then it's best to skip ProCoder altogether.

The reason is that Encore will re-encode the ProCoder output that is used in the menu, and a large quality loss and reversed-field issues will result.

The solution is to use untranscoded .avi or .mov files for the menu background. The choice of codec is yours, but for .avi I recommend Lagarith or DV, and for .mov I recommend Photo-JPEG.