I just did a test with the camera hooked up to my TV without recording and it's not exactly the same but when the camera sees anything that is somewhat bright it shakes really fast when I pan by it. I looks fine panning by things that are dark. This test was done on automatic and manual.

I also found another user having similar problems:
http://www.dvinfo.net/conf/showthread.php?t=37879

I guess I will have to find a repair place here in Houston.

Thanks for all your help guys.

Does your camera have opitical image stabilization? OIS may try and lock on to a subject (i.e. a bright spot) on a quick pan that it wouldn't "see" when it's dark.

I sent the camera off to canon today so well see what they say...

I have the same problem with my Canon XL2 camera. It is PAL version. The problem appear in 50i and 25p mode, with OIS ON/OFF, shutter speed 1/50 - 1/200 .... same tearing effect.

This tearing effect was always , from the moment I bought it (new).

What I observed is that this tearing effect is visible only on PC monitors, TV's (CRT/LCD) and in camera viewfinder. But not when I output to my JVC Monitor trough a BlackMagic Design Capture card. Maybe is something related with how the frames are interpreted.
Let me know what response you receive from Canon service.

Will do Sergiu.

I actually watched some old footage the other night that I shot about a year ago on the xl1s that I KNOW had no tearing in it. As I watched it on my PC I noticed that it was tearing like it did on the newer footage. I then burned a DVD of the footage and watched it on my TV and it was smooth (no tearing whatsoever). Last week when I took some NEW panning shots, captured it, and burned a cd it was tearing...

The one thing I know that the camera does that I never noticed before is the shuttering (while panning) viewing it live (in record mode) on a TV. I sent canon a FULL discription along with a CD and DVD showing the problem. I even printed out this thread and included it (I marked out everyones name).

So now I'm a little worried I sent it in for nothing although I guess I could get it cleaned and serviced. I'm actually more worried that they wont find anything wrong vs them finding some big problem. Well see...

Hi Oliver,

Any news from Canon service regarding your problem ?

Glad they were able to fix it. This is good info for anyone else experiencing the same problem.

It sure would be nice if Canon was more specific on their repairs, but oh well.