Okay, as promised earlier, here are the settings that I am using for DIVX 4.12 and converting to mpeg2 SVCD. This is beautiful.... here are the settings for DIVX compression:

Variable bitrate mode = 1
Performance/quality = slow
Output VideoStream = 4441
Maximum keyfram interval = 300
Max CPU usage = 100%
Default Postprocessing level = 2nd notch
Maximum Quantizer = 9
Minimum Quantizer = 4
Rate control averaging period = 10000
Rate control averaging period = 600
Rate controldown/up averaging period =
Encoding quality = 75%
VirtualDub set to 23.9FPS
Resolution set to 512x384
Using YVU12 format
Audio PCM 44,100Hz/16Bit mono, 86KB/s

I used this to burn a SVCD using KingViper Template. It came out beautiful, no frames dropped..by the way I also utilized 3:2 pulldown in the template because the capture was at 23.9FPS. This way it was converted to 29.7FPS utilizing the 3:2 pulldown. The variable bitrate was about 800 or so on the template. I was able to capture an entire movie by utilzing DIVX compression...movie was almost 2 Hours/120min. Came out excellent.