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Actually are you sure that you put the quality at 640x480? That doesn't sound right, usually that option allows you to put the quality of the video up to like 200, instead of just 12. If you picked 320x240, then 12 is almost the highest quality possible that you can pick with that resolution. Try it again, and try picking "VGA". When using "VGA" option and a 22 minute video, it's like 7-10 minutes to re-encode. I have a Athlon 1600+ "Palomino" Core, with 256MB DDR 266MHz RAM, but can't wait to build my new computer with Pentium D 830!!
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