OK, trying to tackle this problem again.
Holding down mouse button effect has now completely disappeared.
It seems to be a field problem. I discovered that if I did clips>video options>field options and checked the box for Reverse Field Dominance, the graphic will temporarily look fine in the timeline monitor, as long as the red line is above the clip. When I Render Effects in Work Area and the line turns green, the graphics go back to looking like crap.
All resolution settings are at 100%. The graphic looks extremely aliased and jagged. Anti-aliasing filter makes it look worse. When I have the same title side-by-side in the source monitor and the timeline monitor, the SM image looks fine and the TM image looks jagged and aliased.
The jagged graphics are carried into export when I make an MP4 or AVI file.
Any ideas?