I ususally select "Passthru" but sometimes its red meaning its not the right selection for that particular video. But I dont know about Pass-1 or Pass-2. I've tried Pass-1 once and i noticed it still creates a large video file, but i cant tell if quality is reduced? sometimes it doesnt look as clear as the original video and sometimes it looks fine. are those settings also "lossless" as far as video quality goes?