[QUOTE=kenshireen;2180392]Is there anyway to get a smaller output file size with a better quality picture.[/QUOTE]
ken, wish it were so. That is why they call MPEG-4 (H.264, XVid) a lossy compression. You lose something to compress it.
Due to the random nature of raw images (video, music or still) it is hard to get truly lossless compression efficiency to make it worth while.
Things we can loose to make the file smaller are bitrates, FPS, and frame size.
MPEG-4 is better than MPEG-2 (DVD) and is how HD channels on cable and satellite are achieved. So the size and IMHO quality of compression increased.
MPEG-4 is pretty good though.
If you were to set XVid’s bitrate to 2000 and FPS to the same (15 or 30), the file sizes would be roughly the same (formating difference), and IMHO the question of quality is roughly the same (very little difference to the naked eye).
From what I have seen, higher bitrates give better edge definition (still items have sharper edges) and this enhances the perception of better quality. The higher the rate, the more data needs to be roughly stored per frame. I say roughly because this is usually a high end setting for the bitrate in a VBR scheme. VBR is nice because a black transition screen does not have to take up the bits of a good contrast shot of a crowd.
As I have also seen, higher FPS improves motion and makes things more fluid. The higher the FPS, the more frames have to be stored.
To me, XVid, DivX or H.264 are just a format difference based on what device I need to have decode it.
That is my 2 cents on the matter.