What RES should I convert this divx avi 640x272 to for best

[Siogo]

This is my first attemp at a full movie vcd.
I am trying to convert this file to a xvcd or svcd.
I want very good quality.
THe original avi is good but not the best at times. It is clear but gets blocky sometimes (mostly during fast action scenes)
the info I got on virtual dub is this :

My big question is should I try this as a xvcd or svcd?
what resolution would this convert to ok? It is an odd size isnt it?
What bitrate? I dont care if its on 2 or 3 cd's the movie is T2 it is 2h 16m long.
I dont want it to be too thin like a small letterbox.I have tempge 12...and virtual dub.
any help appreciated.
thanks

[Siogo]

Cant anyone help me? I am watching a 5 minute clip i made and it is crystal clear in parts but gets blocky in parts too.
I think its standard resolution for an xvcd 352 x 288
any better ideas?

[corwin1]

If your original avi file is blocky in some parts, it may be difficult to correct it with TMPGEnc. Unfortunately the source file is your biggest issue, so if you can, try to get another better copy of it. if not, try 2 pass variable and in advanced check the box that says soften block noise. It may improve a bit, but again not by much as your source file is the real problem. I had the same problem with "The Abyss", the source file was blocky and I could not correct it without compromising quality of the overall movie.