When you take a character screenshot from WMV, make it as large as possible, like the following (as an example, and I've made is smaller to avoid massive images):
Now, before you screenshot that, press Ctrl+Z to remove all spell/glowy effects. Once it has been screenshotted, paste it in Photoshop. Then you crop out the menus, so you have your character on a pink background:
Next, go to Select --> Colour Range. Click the background of the character (the pink bit), tick the "Invert" box, and press OK. It'll be like the following image:
You'll now see a dotted line around your character. IT IS AT THIS POINT THAT YOU ROTATE THE CHARACTER, if it's needed. Use Ctrl+T and you can rotate it by moving your cursor outside of the selection field, and dragging on the grey area. If you rotate it later on, when resizing it for the signature, it becomes pixely. ONLY ROTATE IT FOR NOW, NO RESIZING! If you don't need to rotate it, don't worry, just go to the next step.
See the following, I've rotated it:
Now, without pressing anything, copy that. Open up a new canvas (one specified to the size of the signature you want to make; I've used 400x100). Paste it on that layer, and by using Ctrl+T, resize it, BUT DO NO ROTATION HERE.
Once you're happy, accept the resizing, and you're sorted. Here's what I ended up with:
There we go. All nice and smooth. If there's any pixelation at the end of making the signature, just slightly blur over the pixelated areas (at 40% opacity). Don't overdo it, though!