Hook up a capture card to the vcr and hit play. My old company used that Snappy capture device, but a Radeon AIW or the like should work fine. That should save the movie as an avi (non-divx) file. Then, using one of the many freely available encoders out there, convert it to divx. Be forewarned, however, that encoding can take quite a while unless you have a real high end comp.
P.S. Not to encourage piracy, but you do own a copy of this movie. As long as you dont make the file available to others who dont own the film, I dont think you should have any ethical qualms about downloading this movie from someone who has already done the encoding.