YouTube Upload Video Pixelation Artifact Problem

YouTube pixelation artifact problem on upload. I'm using Vegas Video 9.0b on Windows 7. I'm not even sure that Vegas is my problem because I just uploaded an original clip straight off the video camera and had the same problem. Very frustrating! I'm using a Canon VIXIA HF200 set to output 17Mbps 1920x1080 @ 60i. This pixelation issue renders the video completely unusable in my opinion. I've tried outputting video even at 320 and still the same problem to a lesser extent. HELP!!!