VirtualDub can also be used to encode AVIs when it's being frameserved by either FlaskMpeg&Avisynth or DVD2AVI. 

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AVISYNTH FRAMESERVING
DVD2AVI FRAMESERVING

Load your .avs or .avi file by pressing Control - O. AVS files are not immediately selectable, rather you'll have to select AVI (compatibility mode) in the dropdown besides file type. 

Setting up VirtualDub:

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AUDIO COMPRESSION

It's possible to perform IVTC if you desire to do so. Please keep in mind that you have to uncheck keep aspect ratio in the FlaskMpeg MPEG Options, otherwise the IVTC won't work. 

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IVTC

If you are using FlaskMpeg without IVTC you can skip the resizing, otherwise the picture has to be resized. Press Control-F.

Then select the resize filter and press OK. This brings up the following configuration dialog:

Set the desired framesize and chose Bicubic filtering. I honestly see no use for the expand frame and letterbox image.. I've done without it and the result was exactly the same image as FlaskMpeg delivered.

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SUGGESTED RESOLUTIONS

Then press on cropping..

The process is much easier when you use DVD2AVI. In case of FlaskMpeg you can either use FlaskMpeg multipass or you'll have to stop frameserving and start the frameserver again before you save the AVI. 

If you want subtitles add the right subtitle filter as well.

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SUBTITLES

Press Control - C to go to the compression options.

Chose Configure and configure the DivX codec. Set keyframes to one each second will result in best fastforwarding results and prevent frame freezes (where the audio would go on but video would be stuck). 

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BITRATES

Then press F7 and save the avi and watch as it slowly encodes.

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FIXING SYNCH