Loss of clarity

I am capturing my digital video from my camcorder,
through an IEEE 1394 interface, using WMK 2.0 on my
Windows XP Pro SP1, machine. When I store the capture
file in wmv format. I then convert it to mpg so that I
can build a SVCD, anc burn the SVCD using Ahead Nero. The
resulting SVCD video is not as sharp as the replay from
my Camcorder. Why? What am I doing wrong? The video
output of my Camcorder is digital (ir is a DV Camcorder?
so why I am experiencing a loss in image quality that
should only occur with analogue systems?