No, it should convert much faster than that. Think it defaults to avi file when I use it - then I convert the avi to AMV. The progress bar sometimes stays at 0% until it finishes converting - and then suddenly comes up with a completed message. Play around with it a bit and see what it does. There is a tpoic on the forums explaining how to use pocketdivxencoder, so do a search on that if you have problems. My files were only about 40MB originally, so the conversion process was always quick.
Hope you get it sorted ok
Cheers
Si