It's ironic that the popular DivX codec has all but obliterated the identity of the ill-fated DIVX pay-per-view rental system.
I switched to prefering xvid around the same time divx became commercial and started bundling unwanted software in the codec download. It was a pain as not all video at the time were xvid yet.
Nowadays, you can just download one of the codec packs which contains all of the neccessary codecs for your video viewing and converting needs:
http://www.codecguide.com/
http://xpcodecpack.com/
You should also check out DivX Labs, where you can find links to the DivX codec 6.1.1 update, Dr DivX 2 OSS, DivX 6 for Mac, DivX 6 for Intel Mac beta, the beta DivX Browser Plug-in, SDKs, CES video blogs, and more good stuff 
ffdshow is by far the best DivX/XviD/MPEG4 codec out there. It uses about 8% cpu while playing a video with postprocessing.
It’s also got a great set of video processing filters (like lighting/gamma adjustment, colour adjustment, screen capture, logo erase, subtitles, smoothing, deinterlacing, movie statistics, and a whole whack more). And what’s best, you can access them by an icon in the system tray that only appears when a movie is playing!
The postprocessing filters are great too. And when they get the new mplayer postprocessing filters in there (the one that uses the shmancy new SPP entropy smoothing algorithm that actually makes crusty errored videos look smooth), it’ll be GAME OVER.
I’ve become partial to just installing ffdshow on my own machines; it seems that it covers pretty much every major format without clogging my machine up with redundant and useless stuff like a regular codec pack might.
I now encode movies and other files with Nero 7’s Nero Recode 2 in the Standard MP4 format. I then use MP4CAM2AVI_v227 (google it) to convert to a divx-compatible format playable in DVD players such as the LG LDA-530. It increases the file size (ie 1120-1230) but does not affect the quality which is superior to divx or xvid. The whole process is MUCH faster than converting with divx.
This also enables the use of Nero Recode 2 which is really handy. The only drawbacks (which I’m used to now) are you have to figure out how much the file size increases if you’re trying to fit to a disc size and you are limited to a 2GB file size with MP4CAM2AVI for each file which is rarely if ever a problem. (If you get this problem you can split the mp4 with YAMB, use MP4CAM2AVI to convert to avi then finally “append” the segments with Virtualdub).
I’ve done four movies and they were all superior to any xvid or divx I have done using AutoGK, Divx6 Create or Virtualdub. I could NOT distinguish the DVD from the final avi file. It’s the Nero codec. (use the default Standard but NOT avc) Use 2-pass for best results.
The future of Divx?
WMVHD is not really competition as its based on DRM and almost in a separate category for the intended use. I’d say it’s really between Nero and Divx for the compressed file market. Divx is really advertising but have an inferior codec. A nice piece of software to make the Menus (DVD Ultra) will really be the deciding factor. I suspect Divx will get its act together and come out on top. However, there’s a real problem they will tweak their codec to the point that players with poor firmware support won’t eventually play newer versions of the codec. (However, if streaming wireless devices come more common, many people will stream from their PC rather than buy a new device. I know I won’t want to pay between $400 and $1500 for a good High-Def/DVD-Ultra/WMV9 etc device if I can spend $100 or so on a box or just buy a long cable.
Please pass on the MP4CAM2AVI info!
Thanks for your candid advice. It’s hard to find simple english (non-techy or at least not too techy)commentary such as yours.
I look forward to trying your alternate conversion techniques.
Thanks.