Oversize problem with virtualdub and avisynth - 1stpass

[Fuknsuk]

I have a 700mb .avi (xvid codec) file with ogg audio, basically what I want to do is trim the file size down a bit and encode the ogg audio to mp3.
I imported the file in virtualdub using avisynth. I chose two pass encoding, during the 1stpass the projected file size is approximately 80GB! Thinking it was an estimation error, I let virtualdub run it's course, sure enough within mins the output was already over 1GB and no where close to being complete.
I've successfully used avisynth and virtualdub to convert mpeg to avi using twopass encoding in the past, so what could be causing this oversize problem and is there a workaround?

Here are my setting for the xvid configuration:
Profile: AS @ L5
1st pass:
Motion search precision: 6 - Ultra High
VHQ Mode: 4 - Wide Search
checkmarked the following:
Use VHQ for bframes too
Use chroma motion
Turbo

[jagabo]

VirtualDub defaults to uncompressed if you don't select a compression codec. Use Video -> Comrpession... to select the Xvid codec and set the parameters.

[kschang]

And OggVorbis is MORE compressed than MP3... It's as good as MP3Pro. So why would you want to downgrade?

[jagabo]

Maybe he wants to play it on a set-top player. Or a portable.