Hi glynnie,
I do remember getting that error too, can't remember exactly what I did to fix it as I tried a number of things and it works

.
What you can try is:
1. In the "setting" of the AMV Converter, put a tick in "try another codec" and then do the convert and see if that fixes the problem.
Otherwise,
2. You can also try install the codec packs, as the converter might not have the necessary codecs to re-encode the .avi file into an .AMV file.
Hope that helps.
Try that and let me know if it fixes the problem or not.
Thanks,
Binh