Bad video interlacing leaves distracting horizontal lines across your screen during video playback (especially when there's a lot of on-screen motion). Tech blog Tested details how to fix video interlacing on the fly.
For videos that were ripped with interlacing, the folks at Tested recommend going to a tried-and-true Lifehacker favourite, the Swiss Army Knife of video players, VLC:
Both the DivX and VLC video players feature deinterlacing filters during playback. They're disabled by default, but you can access them by going to the File > Preferences > Advanced menu or right-clicking the video respectively. The Bob and Linear deinterlacing options can often produce very good results, but they require more processing power than other options. You should only activate the deinterlacing filters if the video shows a lot of combing. If you try to deinterlace a video that's not interlaced to begin with, it can waste processing power and look strange.
The other solution, of course, is to avoid the problem altogether using, for example, the Deinterlace filter in HandBrake. Hit up the full post for more tips, and if you've got a preferred method for improving interlaced video, let's hear it in the comments.