I use Movie Maker as well - built in with XP. I've tried a number of utilities and applications to produce the final results, and found that Movie Maker created the best copy, and compacted it the best. I got Mr. Deed's down to 140MB - very clear image.
BTW - I'll use DVD Ripper to extract the VOB files and convert them to MPEG - Then pull the MPEGS into Movie Maker and convert it to avi using the PocketPC settings to disk.
Now it's time to purchase the 1 gb compact flash card. Anyone see any deals? They are floating around $200 right now.