need some tips, about making a video

Since i am about to quit wow at 3/6 i decided to make a video myself (just for personal use only) nothing really fancy, just a few duels, some BG fights and some 2vs2 with friends.
I used xfire to capture video at 25 fps, since it lowers the fps of my video card to 25 fps anyway, and the files are 1gb per minute, so i used virtual dub to make them smaller.
i got vegas pro 8b, and i am playing with it, but...here i need some help.
While, the dubbed videos are in good shape (quality wise) when i render a compilation from vegas the quality drops drastically.
I used xvid codec for dub, and same options with vegas, ended up with a 770mb (20min video) with crap quality (at 684kbs). I could use any tip to make the quality close to your videos or even similar regardless the file size. As i said i want it for personal use and not planning to upload it anywhere.

thx in advance

P.S. i run the game at 1024x768 and the vegas turn it automatically 720x480

You can change the resolution in sony vegas. Just go to properties and change it there. I render it as wmv, and if you use Quality Bit rate vbr I think, then you can increase the quality of the movie to 3000 kbs for example.

aha, thxx:)

cause my last try, as avi at 1024x768 ended up to 1.8 gb but with decent quality this time.