Why "Preview" mode higher quality?

Also, I've tried inserting SWF, MP4 and FLV formats of the videos.. all the same degradation result.

You may want to see if there is an option in Camtasia that allows the movie to scale or not. If there is, you probably want to allow scaling. Also, you want to make sure that the presentation is being published with the player template you customized that locks the presentation at its optimal size. Another thing to consider is that if you are using the Slide only view to change that to the Standard or No Sidebar view as the Slide only view slightly re-sizes the dimensions of the slide.

Thanks for your input Justin. I am using the template that has the Standard view locked at optimal size. The Camtasia dimensions are fixed... I don't want the movie to scale either larger or smaller, because that's one thing that causes degradation. Thanks again Justin.

If anyone else has ideas, please let me know.

Putting a movie in a presentation that does not allow scaling can be problematic because it can cause issues with the player as it can distort the parent SWF. Here's some articles that might help:

http://daveperso.mediaenglishonline.com/2011/03/03/articulate-and-camtasia-update/

http://daveperso.com/2008/03/23/using-camtasia-with-articulate-presenter/

Here is a brief video tutorial describing this process:

https://player.vimeo.com/video/143915035

Thank you so much Justin, those links are great. I'll work with it and see what happens.