Oh please no, he has the worst settings for wow ever. All his hotkeys are so different than mine, also he is a noob, I cannot let him see my 1337 skillz!
Any video stoop makes is in essence all that I have taught him.
XviD is the way to go. It's the freeware alternative to DivX. I recommend version 1.0.3, but that's because I can burn the video files to a DVD-R/W (without converting to MPEG-2 format) and watch them on my DivX player, w00t!
You can download the XviD 1.0.3 codec from this page; click here for a direct download.
For a program to convert video files, I recommend AutoGK. I use it to convert fansubbed anime to XviD 1.0.3 and I like it quite well. It's far easier to use than any other video conversion program I've found yet (and I've tried several).
EDIT: Just to avoid confusion: All XviD files are .AVI, but not all .AVI files are XviD. XviD is a video codec, not a filetype.
EDIT: DO NOT use the QPEL or GMC option on the XviD codec. They're bad, very bad. (Either of these options will make files unplayable on my standalone DivX player.)