export it to dv-avi like you are just now, then load it into virtualdub and re-encode it to xvid.
do 2 passes. 3 minutes 640*480 won't look all that good unless the filesize is around or over 25MB. You'll need to either lower the resolution or increase the filesize from 10MB.
AMD Athlon 1700 (@2200mhz from 1466 sod the noise!) - 768mb pc3200 - 200GB Maxtor - Pioneer 106 - GF4 Ti4200 - twinhan/visionplus pci dvb-t - random pci analogue tv tuner - A7v600-x (to replace the a7n8x-d that died...) - random 17\" CRT
Sony STR-DE425 & Eltax c205s;
xBox w/20GB HDD- executer 2.3b;
xBox - standard;
Konica/Minolta dimage z10 w/2x512mb SD;
A silly amount of Cat-5 and usb cables