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You don't need anything else to run virtualdub. It is self-contained.
Optional, but helpful things include
Avisynth, if you are prepared to do some scripting
Lame MP3 for better MP3 audio compression
Cedocida DV codec if you are dealing with DV AVI footage
Extra plugins to extend Virtualdub's own feature set
FFDShow if you are dealing with lots of different codecs in your source videos.
There are no 'best' settings for encoding. Each video requires it's own settings, based on content. Also, different codecs require different settings. There is no universal answer to this question other than experience will tell you what you need.Read my blog here.
Thanks.. can i also know how can i install flv plugin in it..