Hi Uncleb!
You need to install a good video compression codec such as DivX -
www.divx.com - or Xvid -
http://www.xvidmovies.com/codec/ - and use a program called VirtualDub -
www.virtualdub.org - to compress them into that format. Of course any PC you're running on will have to have the codecs installed, but anybody that is into watching video footage on their PC will probably have at least one of them installed anyway.
Another option is to use the Windows Media Encoder -
click - and that will put the files into WMV. As for the best bitrate to use, the only way you can find out it to experiment with the different sizes, and see which one give you the best quality/size ratio to your preference.