Don't bother with Video Mach...
In my experience, RAD video tools is one of the better avi makers/converters. Unfortunately no commercial products may be made from it, and you need to give credit to the company if you save anything as a BINK! format... which is fairly simple because if you save the movie as an exe file (which encompases the de-BINK! codec) it automatically credits the company for you -- though you may want to check their FAQ out.
Also they allow exporting to AVI with practically any codec you may have installed -- such as XVid, DivX, Cinepak, Indeo, etc. For compression in DivX they're one of the best... assuming you learn how to adjust the settings correctly.
As for sound files -- that's a different story... may I recommend "Audacity", linked up with the LAME MP3 codec (both non-commercially free software.) Then record (may I recommend the Louisville Slugger to a Watermellon for a nice stress reliever -- all in the name of audio recording, of course) -- or just rip it from your favorite game or movie... but you didn't hear that from me :b