Use the default settings for global project options and whatever resolution you want. Select DivX low-motion video: 500-1500 bit-rate, 10 sec keyframe, 100 crispness. For audio you have 2 choices, MP3 if you want to direct stream copy in Virtual Dub or PCM to encode with Virtual Dub. Run Flask and have a beer or two. 😉
Load the finished AVI in Virtual Dub and correct MP3 audio synch by delaying/advancing audio track. You would use the direct stream copy mode for both audio & video with Flask encoded DivX/MP3. Click on File/Save AVI to start dub. It only takes a few minutes to run in direct stream copy mode. You can use Virtual Dub to capture video, encode, edit, filter and of course synch audio. It's a great program but somewhat complicated. Floyd's instructions probably won't make much sense until you use it.
There are hundreds of ways to encode and quite a few codecs. MPEG4 is impressive but DivX Deux will be better. 😉
BTW, get the lastest Flask. PX3 2nd Strike is very fast.