I have now installed the XVID codec on my computer. By the "AVI Properties dialog", do you mean the properties tab from the "Settings" window? If so, the XVID codec is not found on the drop-down menu of video compressors.

Is there something else I need to do before using this codec? Something I missed?

In comparison, the converted AVI version is more pixelated, even though the best quality settings are used. I used Cinepak video compression, retained the original video dimensions and frame rate. Will converting DVR-MS to AVI always produce a lower quality result?

How can I retain the EXACT same quality?