Reencoding degrades the quality, so you would be much better served to change to a program that can encode to what you want in the first place. If the program doesn't allow you to export to avi and choose a codec, then it's a POS.
If you have an avi and want to make an mpg, then I'd recommend tmpgenc. You may be able to open your wmv with tmpgenc as well, but again I wouldn't recommend it.
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