Well, on the one hand Dish (as well as Direct TV) greatly compress their SD channels, and that is what is most likely causing your poor picture quality.
Usually, the local stations suffer the most with poor PQ, especially if you are in a moderate to small city or town. The core channls (MTV, HGTV, Lifetime, etc.) have the next best quality PQ while the best quality PQ can be enjoyed on the premium movie and PPV channels.
However, in the past, Dish has managed to improve PQ after putting pressure on their bandwidth. The engineers at Dish are constantly doing all they can to improve PQ to the best possible, and I expect Dish to improve the current state of SD PQ, but certainly not to the level it was back in the late 1990's.
The other part of your poor PQ problem is something you probably don't want to hear: your TV.
I have dish connected to many old and new TV's. My old JVC shows the pixels quite easily, and I have to adjust that one just so. Meanwhile, my Sony (an HS model) and my Aunt's Sony (an XBR model) do a magnificent job of displaying a beautiful picture with the minimum of adjustment. I am floored at how good some of the crappy PQ Dish channels look on her fine old XBR (adjusted for her by yours truly). The over-compression artifacts just can't be distractingly observed! Meanwhile My HS Sony upscales so well that I have my sharpness control set to its sharpest setting. In other words: there are a lot of expensive TV's out there that do a lousy job of upscaling. Also, LCD is notorious for doing a poor job of handling motion, resulting in picture breakup. I've even observed this and other LCD weaknesses on Sony's impressive, new flagship Bravia 1080P LCD, displaying bly-Ray DVD, no less. OK, enough of TV basing.
Try this approach to minimize your pixel poor PQ and for best picture in any circumstance:
Use the lowest contrast setting possible. Start by turning your contrast all the way down. Then increase it slightly so you have the least difference between light and dark. Now use the brightness to make it lighter and the dark areas visible. The more contrast, the more the pixels can be observed. Also, colors are more rich and vivid at this setting and will allow you to turn down your color and tint settings that result in less color noise as well.
Try to set the sharpness to as sharp as possible. Then tweak ever so slightly until you like what you see.
In truth, it will take you some time to really get it to where you want it (a few days of tweaking, at least) because different channels will look different from each other, so you are going for an average. Remember to tweak ever so slightly. Keep experimenting, and let us know how it goes.
