Thanks for the replies and information.
Saving in H.264 is fine and I'm happy with the custom settings. I never knew this was actually MP4.
Currently I convert my .mts files with a free AVCHD converter to MP4 files, the settings of this program help me reduce the file size without too much loss of quality. The converted .MP4 file can then be played on most media players.
With Power Director I can only save a low quality .MP4 portable file or custom .M2TS (H.264) which I'm told is also MP4 but is not recognised on most media players.
Now I'm more confused than ever.
As I said before the only way I can achieve a reasonable quality and low file size MP4 is to save as .M2TS in Power Director and then convert to MP4 in an external program.