The most obvious choice is Virtual Dub as it is very flexible. You could get divx codec pack from
www.divx.com. Using virtual dub you could also encode the audio stream as well as video stream. Audio stream can be saved as mp3 files (It must be noted that both audio and video stream is saved as one file) making file size even smaller.
You have to play with configuration to get balance between good quality and smaller file size for divx codec setting, which can be accessed via Virtual Dub menus.
Plz read carefully all documentation before trying encoding with Virtual Dub, so you don't loose or mess anything. Plz make a temporary copy of one file to find best setting for divx.
Hope this might help you out.
