You have to get mencoder running. It should have xvid codec linked in so external codecs aren't the problem. Try downloading another version from the internet and overwrite the one in AVConverter dir (it has hidden and system flags set).
I'm converting my videos under linux using mencoder directly here is the script that i'm using
Code:
#!/bin/bash
mencoder "$1" -o "$2" -ofps 20 -vf-add scale=224:176 -vf-add expand=224:176:-1:-1:1 -srate 44100 -ovc xvid -xvidencopts bitrate=300:max_bframes=0:quant_type=h263 -oac lavc -lavcopts acodec=mp2:abitrate=64
Musisz jakoś uruchomic tego mencoder'a albo znaleść cos innnego
najlepiej mencodera
