Divx3 (and many variants) was not a proper Mpeg4 video format, but a hack of a microsoft codec.
No divx player will play divx3.
I'm pretty sure mine does - I seem to remember playing one about a year ago. I no longer have the file / disc so i've checked the specs and they seem to confirm this.
So far it's played pretty much everything I've tried whether its on +/- R/RW and doesn't seem too picky about the type of folder / filing system used. It also seems to handle discs with multiple files in various formats without any problems. Including DivX 6.X and something called .dat, neither of which are quoted.
Ok, now to the bad part. In my experience irrespective of file / format / disc etc, DivX and / or Xvid files, if playable, can still cause some issues (probably due to the the firmware of the machine). These will obviously vary from machine to machine and are sometimes only as minor as playback being a little jumpy but can be more extreme.
The moral of the above being - even if your machine will play them its still sometime better to convert to something like mpeg2.
If you have a great player and have no problems go with the existing format however, the options suggested debro and imkidd57 are probably the safest route.
Personally I use tmpgenc with ffdshow as a directshow encoding filter. I think these are still free and although can be a little complicated I have experienced sound sync problems using other methods.