If you want to try out Divx via Pocket MVP. This is a very good proram that would simplify what you're doing.
http://divx.ppccool.com/
It allows coding of (unencrypted i believe) .vob files straight into avi in divx or xvid format with audio of mp3 or ogg, which can be played back on Pocket MVP. It also allows for clipping/rotation/bitrate/framerate/audio rate.
btw, using your method, going from MPEG-1 to WMV probably loses a lot of quality, since mpeg-1 is far from the best video codec, especially for storing video before converting to another format.