a question about workflow:

I want to convert a vob file to deinterlaced avi. I've found I can do both with virtualdub.

Would it be better to convert to avi and save, then deinterlace the avi file?

or do both at the same time?

Both at the same time. I think it's better to deinterlace before applying any compression algorithm to the file.

I've been experimenting to find the best settings for deinterlacing.

a new question: the video was shot interlaced, encoded and burned onto a DVD in a VOB file. I'm going to convert these VOBs to AVI and re-edit, then encode to burn onto a DVD for viewing.

Should I deinterlace at all??? what determines when to deinterlace and when not to?

In this case don't deinterlace.

Generally deinterlacing means loss of resolution and detail and unless you need to ouput progressive footage then don't deinterlace.

Should I deinterlace at all??? what determines when to deinterlace and when not to?

The target display for viewing is what should determine whether or not to deinterlace.