How to use winamp format converter with Ipod

I am using 5.32. Can I go to portables (My Ipod) and right click in the Ipod ibrary and transcode (Use Format Converter in Winamp)? The reason I ask is that I am not given this option when I right click from the Ipod library. If I do have to use the local library to convert, will the converted file over-write the original file on my desktop? I want to have the MP4/LC-ACC on the Ipod, but would like to keep the MP3 on my computer. Also, I read somewhere that there was a way to set up Ipod, so it would convert all files transferred to it upon syncing. It seems like I can only do this process manually. Please advice. I don't know how to paste a picture of my desktop to this site so you can see what I am describing.