Panning JPEG has Horizontal Distortion

Hello,
I’ve setup a simple image which pans back and for on a mouseover. (Using this tutorial http://www.kirupa.com/developer/flash8/interactive_image_pan.htm)

Whether testing a jpg, gif or png - all of them give a really awful distortion when panning, something like horizontal fractures running across the image.

Any ideas what might be going on?

Thanks.