Making video files, what is your way?

I've tried several programs:
Roxio easy media creator 7
Inter Video WinDVD creator 2
DVD to Pocket PC
Pocket DVD Studio
Windows media encoder
Pocket DivX Encoder

I'm trying to find the best format to make a very good quality, 640x480 movie.

I've been using Matrix Revolutions at 129 minutes. I'm having trouble with black areas looking blocky, with fast movement pixelating, and where there is a lot of fast motion on the screen (pixelates).

Thus far, my best luck has been with Pocket DivX encoder using the E805 setting and 800mb/s at 29fps. The film looks very good on my PC. However, the file size is 820mb. I'd like to be smaller, around 500mb to get 2 movies on a 1gb card.
Anyone found a way to get very good video at VGA (640x480) down to that size?
What programs, encoding (avi,divx, xvid, wmv, etc.), what data rate, etc are you using?
Thanks.

try virtual dub. i used 640x480@300 kbps video, 64 audio, xvid WITH bidirectional encoding, and ogg vorbis audio. qyality is surperb....

make sure it's 2 pass encoded.