If you already have TmpegEnc, I recommend downloading DVD2SVCD(it's free). It's a frontend that uses TmpegEnc to encode the video but it takes all the hassle out of it.It has a lot of different inputs and ouputs and produces good quality. You can download it from afterdawn here: http://www.afterdawn.com/software/video_software/dvd_rippers/dvd2svcd.cfm I recommend looking at the guides first(links are in the program under the "about" tab). And might I recommend encoding to svcd instead of vcd, the video quality is much better.
well if it is just a divx file, then why not just decompress the audio with VirtualDUB and use TMPGEnc Project Wizard? Now I'm all for DVD2SVCD, i love the program but I dont see why people would use it unless they were making SVCD with CCE SP, or they were using TMPGEnc but their input file had ac3 audio!