Video Transcoding.

For all the techies out there - I know I asked you once, but I'll ask you again, since things have probably changed since then. How do I make my .avi files (the ones that come out from the digicam) more compact? I tried to change their encoding using the Windows Media Encoder 9, but the bloody software crashes the moment it sees my .avi. Any other suggestions? I don't need the most compact format in the world, but one that is fairly standard today. Ease of conversion (audio+video) is also a plus. Must run on Windows XP. Thanks in advance!