Really helpful Elite_Monkey.
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robin801, you will need to find a convertor from AVI to MPEG. do a google search "avi to mpeg" There is an app out there called avi2mpeg.
Then after you have done that, you can either use NERO straight to make the VCD, Nero has a build in feature in the wizard to help you do it. If your encoding is wrong, NERO will try to fix it.
The quality NERO makes is not great, which is too bad, so the best way is to do the right encoding yourself and then use the wizard.
Good Luck!