Of course, you converted to a wrong format, so bad quality, you should know, the best video format for PS3 is mp4(h.264/avc video encode, aac audio encode) format, so you need to use a better software to convert your videos to high quality ps3 mp4 videos, I am using RZ Video Converter which can convert any videos or audios between different formats with good quality, such as convert mpeg to high quality ps3 mp4 videos. Yahoo or google search and download RZ Video Converter, easy to use, hope it can help you.
May be you need change a software instead. Some kinds of converter software don't work properly on computer, especially free software. There are a lot of software online .here are links to these software, all of them have a 30-day free trial, which you choose depends on yourself. Hope it works.
if it did not fit for you ,just search it on Google .
Days ago my friend suggested me use google to find out a very useful tool
That is a professional DRM removal and media converter, it can remove drm from iTunes, Zune Marketplace, Napster, Rhapsody, Music Giants…and so on
you can have a try
or you can search by youlself
Hey, Why not try iFunia Video Converter. The professional video converter won't let you down.