Finally was able to cut the Spiderman with TMPGEnc last night. I went to kvcd.net and downloaded the NTSC 704x480 KVCDx2 1-CD template and put it in the template folder under TMPGEnc. Then I simply loaded up the Spiderman (mpg format) and this template and hit start. It took around 6 hours to finish and that's pretty long because I have a Athlon XP-2000 with 512MB Ram. After that I just use the cut function in TMPGEnc and successfully cut it. I viewed it briefly this morning and compared it with the original file and the quality is the same!

KVCD has several templates, which I'm not familiar with them at all, I chose this one simply because it says "High Quality". Also, I thought that might compress it down to fit on one CD (I thought that's what it means by 1-CD). Anyway, the file size reduced a little bit (less than 100MB), maybe it will fit if the original Spiderman that I downloaded is in AVI, I don't know. But I'll definitely download all the templates and try them out on different file formats and find the best suitable for each and everyone of them.