I have used Ulead Video Studio 7 to create several wedding video DVDs. I tried adding a slide show to the DVD and saw the same thing you mention.
Pixel dancing is a good description. I described it as shimmering photos.
I never found a solution.
I started using Ulead DVD Picture Show 2 for my slide shows. And it has worked fine.
I have since, switched to ProShow Gold 2.0 and it is the best that I have ever used. It has the Ken Burns' effect and gives you total contol of audio, with Background and Foreground sound.
Two years ago I made a slide show with Ulead Video Studio 6. It turned out fine except for some "pixel dancing" in the slides. I upgraded to UVS7, the "dancing" problem went away, and I was pleased and believed that I had seen the last of that problem.
Two weeks ago I created another slide show in the same UVS7. The slides were still images captured from a DV-AVI file to BMP format. Turned out great -- rock steady images, perfect transitions. Full satisfaction.
Yesterday I made another slide show in UVS7 from JPG images from my digital camera. The pixel "dancing" had returned and I just about fell off my seat. Why? I converted the huge, original JPGs to BMP, tried resizing, changing the project properties and everything I could think of, but the images still shift and dance to my complete bewilderment and aggravation.
Why? What mystery is this? Does anyone have any ideas?