I don’t have DVD Studio Pro (DSP), but I suspect it does not support vector graphics (your shape) and is converting it to a bitmap and creating jaggies. Here are some ideas in no particular order:
– Don’t copy/paste. Try importing the oval as a file in DSP. If it recognizes .psd files, then it may work. If not, then try saving the file as TIFF (or some other format DSP supports).
– Rasterize your oval in PS then copy/paste.
– Use a blur filter on the oval in PS (probably need to rasterize first). Ideally, your background is transparent, and DSP recognizes alpha channels. If trying to import as above, make sure that if you save it as TIFF to include the transparent/alpha channel.
Pauley