Sony Vegas 10 blurry rendering

Hello
So what happens is that the video renders blurry - even if I render it at very high settings.
I am referring to motion blur if you will be it's way over sensitive - like the slightest curvy motion from the camera man sends everything into motion blur.

Project settings
1080p
25fps


The original is
1920x1080
H.264/AVC
20,4mbps
23.97 fps
mov format

I'm trying to render
720p
6mbps (tried highest quality which rendered 40mbps but still the same blur)
I've tried mp4 format (h.264) and wmv.

There is one particular scene where the camera man slides parallel to a line of people and all I see is blur of people like shapes :

Any help will be greatly appreciated!

Thanks
Stan