Hi Noah,
Thanks for replying. While PNG is compressed it is a lossless codec and doesn’t result in visual degradation. It uses “deflate” to do it’s “zipping”.
I just realized that the interlaced setting in PNG is more of a progressive download feature and has nothing to do with NTSC interlacing.
So even though it is a lossless codec does DVD SP not handle this correctly? Or maybe it cannot handle the interlaced option(progressive download) I checked. Of course now that I know this I will leave it unchecked but I will also try your advice and just use a flattened PSD and see if that helps any!
Thanks again for your input!