I have a few observations for you:
1. I can tell this is a Hauppauge PVR-150 being used. The 150 model card has a different capture/encoder chipset from the better 250 and 350 cards. It makes your video brighter than it should be. The luma is shot, and your colors are a bit neon-like and the whites are overly white. Detail is lost from this. I've seen worse, so you might be okay. The MPEG bitrate looks fine, there is no compression noise that I can tell.
2. Those ripples are an interference of some kind. It can be outside or inside your home. If it only appears on that one channel, it's probably an issue at the cable company. If it appears on multiple channels, it's probably something to do with your line strength being harmed, either with bad wires, bad connectors or crappy splitters. If it appears on all channels, it's likely an electrical feedback issue within your home. You can correct this, but only with cartoons. You'd process the captured file with a high temporal filter. On live-action, it would not work, as it would make everything look plastic and degraded. You may want to try putting the computer on a UPS from APC, instead of a surge protector. Those run about $40-45 for the mid-grade ones.
Your "AVI" is what format? AVI is just a container. Did you convert to XVID, maybe? On those, it was really filtering it, plus I would imagine you did some de-interlacing and down-resolution too, which somewhat hides the error (but they still exist!).
You might try some various VirtualDub
filtering methods, before converting back to a new MPEG, but I don't really know what filter to try. You'd want to use a light amount of temporal-type filtering, mixed with an even lighter amount of in-frame type filtering.
The best solution is to remove the interference that causes this, rather than putting a band-aid on the video captures (filtering it, extra work). This means swapping out various wires, testing wires and connections, and maybe replacing some wires and splitters. The less splitting, the better. I suggest using higher-bandwidth RG6 type coaxial cable too, not RG59.