The quality of video recording heavily depends on the codec that is in use. I heard of xvid bringing good results - if not available on your machine, look on their website (xvid.com) for more details.
About shadows: There is no such setting. However, it might be that the darkness in a particular corner comes from the background ramp. If you open the 3D properties dialog of your frame and go to the page "Background", you can define a background ramp there - maybe this helps.
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