I had some minor problems with MC Encoder 1.3. The encoded mpg files would not play properly in Windows Media Player 9.0 or Elecard mpeg player. I emailed MC regarding the problem and they confirmed my findings.
Do not go from DirectX 8.1 to DirectX 9.0, if you are using MC 1.3 Encoder. You may have problems. MC assured me the new version will be DirectX 9.0 compatible. I was able to get Elecard to play by hitting the end of video button and then go back to the beginning by hittng the appropriate button. My DVD player could also be fudged to work.
Here is a copy of MC's reply to my email. I prefer the word will to should, let's hope they mean the same thing, in this case.

Hello,

We do have problems with directX 9. We are working on a solution. The
next version of the encoder should work with DX9.

Regards,

Patrick Kuckertz