Using MPEG 4 compression will give you a signficant size reduction. You can download the Microsoft MPEG 4 codec from
Undercut.org. For audio, please try µ-Law compression.
If using Xvid compression is causing program crashes on your system, it is likely to be conflicting with some other software or codec that is installed. We have done very extensive testing using Video Edit Magic and Xvid together without any stability problems.