You need an NTFS partition if you're going to create an avi that exceeds 4 gig.
As I understand it, you already have a compliant mpeg, and you just want to cut 5 minutes from the middle of it, not re-encode it to avi.
The advice you got to use virtualdub is wrong, unless you WANT to re-encode it to avi, or frameserve it to re-encode it to mpeg.
Get Cuttermaran, VideoReDo, Womble, or similar, and just cut the section out, then re-save the movie in it's original format, without re-encoding.
I prefer Cuttermaran, and it's free.