AutoGK all the way for ease. AutoGK -uses- VirtualDub to do the converting, so essentially, it's like using VDub, but it does all the hard work for you.
So, if you can get it muxed, run it through AutoGK, and it'll put out a nice, HQ, 2-pass XviD for you.
As far as steps to set it up go [it comes with all the necessary 3rd party tools to encode with / do the work], it's pretty straightforward (AutoGK uses steps), so just go from one section to another, input, output, filesize, audio options, hit ctrl+F9 for more options (but leave most of them alone except ESS support, and maybe the cropping if you need to, and also select .ivtc and maybe .colorcorrection, but that's about it - all just a tick on or off). From there, just let it do it's thing. Maybe run a preview first, to make sure the cropping is right (and depending on your codecs and audio type, you may or may NOT get sound in preview).
If you need help, I'm a PM away. I use it ALL the time.