This method uses only FREEWARE tools and the only applications you need to install are the Xvid codec ( if you don't have this already ) and AviSynth.
This is a single pass encode which will save time and can be used for playback in a Xvid DVD player OR just on your PC.
Yes, there are a lot of pictures, but this is only to show it 'step by step'
To make the script just open up a text editor and copy the text shown in the picture and save it as 640 x 352.avs
If you have a 64Bit cpu, there is a change in options with DGIndex to utilise your CPU - last picture in this series
Additional Info regarding 64 Bit CPU's