Well Here's The Answer For Ya Mate......TMPGEnc......When I started out with this forum i had the same query.....but in due time I learned that This software was the best there is to convert .avi or divx files to normal .mpg files i.e the Vcd Format.....But retaining The Quality is kinda difficult or impossible.....cause the compression it uses is very high and hence when decompressing Its not the same quality that u obtain as The Original File.....the most u can do is Some amount of colour correction or Some Other Adjustmenst to Picture Quality but Thats all

.....So mate Try This software (by just googling for it) and after creating The .mpg files outta this u can just simply burn Em on Using Nero
Just Search The Forum and Will get Tons of guides for it too or try
www.videohelp.com it will assist u with Using TMPGenc

So Happy Brunin Mate 8)