I had the same problem. I searched for about 2 weeks to figure out how to do it. I found that with fair use wizard you don't have to do ANYTHING. In one piece of software you can do it all. And, if you forgo the "full auto mode", you probably don't have to transcode it twice if you mess with the settings, i.e. change the output file size to 200mb, fiddle with the settings. But I prefer to twice "transcode" it so that I can burn one copy to a cd.
Fair Use Wizard
Here's my guide:
1. play dvd on pc with windvd or whatever
2. open fair use wizard
3. click on "full auto mode"
4. click on "i agree"
5. make up a name for the project
6. set the destination folder
7. click okay
8. wait 2-4 hours
9. play the .avi file
Later, use pocket divx encoder to encode and betaplayer to play.