All that trouble??
With Nero you do this to burn a VCD or if you buy the plug SVCD... When it starts up you select close wizard, then you scroll down to VCD or SVCD and select. Then you just select your friends.avi and insert it in your burn area.
Then you click burn, and Nero automaticly starts encoding the file to make a Mpeg out of the avi, to be able to play on dvd players.. This does take a while, because it completely re-encodes the avi, so the best thing to do, is burn these cd's when your sleeping or go out. After the encoding, it starts burning automaticly and finishes like normal.
That's it, easy....