I'm looking for a really good encoder or compressor for avi files. I tried compressing them with divxtodvd while also converting them to dvd files, but the quality really, really dropped. Can someone recommend something better?
If you want to end up with a good quality encode you should stick to one the good encoders. That would mean CCE SP or Canopus Procoder at the very high (and pretty expensive) end or CCE Basic, Canopus Procoder Express, MainConcept, TMPGEnc, QuEnc, or HC at the consumer level. All of these will give you good quality, and most have free trial versions (QuEnc and HC are actually freeware). Depending on what format the audio is in, you may also need to re-encode the audio. If the video is from a film source you'll probably also need to add pulldown flags to it. Then you can author to DVD with your program of choice.