> I don't have any way of generating DivX or Xvid.

Lots of freeware tools can make it.  One GUI tool that I find particularly 
easy to use is Xvid4PSP, lots of presets so no need to fiddle about with 
command line options if you don't want to.

> Since my camcorder records onto 8cm DVDs which are reputedly playable on a 
> normal DVD player, I'm presuming it generates MPEG-2. (I'm not sure how to 
> actually get that off the disk though.)

There are much better compression algorithms (ie way lower bitrate for same 
quality) than the DVD-standard available.  Read the instructions, I'm sure 
it will tell you how to get the video on to your computer.

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