Encoding movie files into h264

Question

Found some topics about archiving into h264, but those were about the generic questions (does it worth it, which codec to use.)

I want to use h264 (with CUDA (if possible)). So far I only found Avidemux a usable encoder with x264 but it makes an unwatchable video file after the encoding (using the best profile, all setting maxed out), really blurry.

Please write down detailed what to use, where to get it (if its free, doesnt matter), what to set, etc.
Thanks in advance.

(OS: Windows 7 ulti x64, VGA is VP2 capable with CUDA GTX260 XFX)

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Of course, if there is an up to date duplicate, just comment with the link and I'll remove the question ASAP.

Answer 1

Try Handbrake, it is usually pretty good for H.264.