[zzyzzyxx]

I'm using my parents computer, since I'm temporarily at their home and it's not so great equipment - 128 RAM, 1,2 processor. Does it matter?
At home I've got 256 RAM and 1,8 Processor.

But I tried to do what you say, and I've got another problem.
I'm using 3.74 AMV converting tool, which is on my CD with software to the mp4 I've bought.
When I open the AMV converter from the CD I've got option to convert the picture with 160x120 resolution (which works), but I can't change these options you've said (they're both set on high, video mode 2 - and these options cannot be changed).
When I open the AMV converter after installing it on the computer, I can change these options, but I don't have the option to change the resolution to 160x120 - which seems to be the ONLY ONE that works on my mp4layer (I tried other resolutions, and it all ended up with completely blurred picture on my player).
I'm getting frustrated. What can I do?