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Hardware wise you only need a DVD-Rom. As far as available diskspace it depends on what you are encoding. If you plan to encode a full length movie I would recommend atleast 6 - 8 GB available diskspace on your HDD. Certainly plenty of system memory and a fast processor is good for encoding. I have encoded on an IBM Thinkpad running a PIII at 700MHz with no problems. The runtime it took for me to encode a 90min movies was a little over 5 hours.
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