Hi Jim,
I know you can import avi files into Windows Movie Maker and compress them there.
I posted this for Kush a while back, just ignore the the fact that I'm telling him about a wmv file. It should work exactly the same for an avi. -
Video- Tears In Heaven (Incomplete) - Kush
Hope it works.
Cheers
Clancy
"I like work: it fascinates me. I can sit and look at it for hours". Jerome K. Jerome