VirtualDub(Mod) Encoding

Dear Readers,

I am just curious as my friend and I are trying to release a batch of a Drama, but he is having trouble Encoding (As he is new to it) but on my end.. I was wondering if using VirtualDub Mod... Asides from Xvid what other Compressions could I try out that would give me the best Quality and yet the Smallest filesize? What would you recommend as currently for xvid my settings under ProfileType is:
-Profile ->Advanced Simple @L5
Click on More next to it and you should have the following settings:
Quantization Type: MPEG
Following should be checked:
Quarter Pixel, Global Motion Compensation, B-VOPS (Numbers should be 2, 1.50, 1.00, Packed Bitstream

As for right now after I individually encoded the Drama I am at 6.18gb which will not fit on a dvd-r and I am not sure how low in filesize restriction I can go without losing quality... So hopefully for those that are more experienced with Encoding as I am still a little new to it, maybe you could recommend a different Compression Mode and recommend settings used as well...

If you need more info do let me know.. Oh and incase it helps although I doubt it will.. The RAW's for these Dramas were around 620-660mb and after I encoded I got it to be 588mb without loss of quality.

Thanks in advance.