Using the same version of Movie Maker (build 16.4.3528.0331) on Windows 8.1 and 7 produces significantly different results when it comes to interlacing.

My project and source files (AVCHD MP4 files from a Sony camcorder - 1920x1080) are on an external USB drive. The first half of this test clip shows the serious interlacing issues in the saved movie (default MP4 type - it acts the same if saved to a WMV file type) when saved with my Windows 8.1 desktop. The second half shows the same result when I move the external hard drive to my Windows 7 laptop and produce the same movie, which resolves the interlacing issue.

https://vimeo.com/108363525