This will show you how to convert DVR-MS to .AVI, it a two step procedure. First you need to convert to .mpg, then you can convert to .AVI (DivX or Xvid).

1. First off you need ffmpeg_MPGMUX.exe from here.
   
2. You need to have access to the Media Center DVR-MS files, also a dump location for the .MPG files which they will be converted to in the first step.
   
3. Run the following command changing the parts in RED to suit yourself.

   "\\dlinknas\volume_1\FTP\Software\Multimedia\Vista Media Center Tools\ffMpeg\ffmpeg_MPGMUX.exe" -y -s hd1080 -i "M:\recorded tv\Seven News_Seven HD_30_01_2009_17_58_04.dvr-ms" -vcodec copy -acodec copy -f dvd "D:\Converted\Seven News_Seven HD_30_01_2009_17_58_04.mpg
   

4. This will take a few minutes depending on the speed of your infrastructure/hardware. After this you will need to convert this to the next part, .AVI and this is done using a cool little program called All To AVI which can be downloaded here.
   
5. The trick here is to keep the same frame size aspect ratio as the original file, so that the picture is not distorted. All the programs on HDTV in Australia are broadcast with a frame size of 1920×1088. Generally a TV Shows you download from the internet that is 350mb in size and 42 minutes in length has a frame size of 624×354, which is the same aspect ratio as HDTV. There are some other options that keeps the aspect ration the same. For I-Pods and Creative Zen players, this is 320×181. Other options include, 720×408, 600×340, 480×272, 240×136. Here’s a pretty good online aspect ration calculator, http://andrew.hedges.name/experiments/aspect_ratio/
6. Once you have converted your video files a second time using All to AVI, you will need to clean up the audio using a program called  AVI Utl from here.
7. You can open your video files in here, click on the Filter menu and select Volume & Delay. Click on the setting menu and select Volume & Delay again. This time set the volume to maximum (256), and set the delay to –1. For some reason during the conversion processes the audio gets out of sync a little, and this will fix it.
8. Now you are ready to save the new file,