When you set the settings to render as a .avi, it only spits on a one frame .avi? I had this problem for the LONGEST time, and couldnt figure it out...

You could try loading the preset> Moviesetup. That worked for me once or twice. Otherwise, if you have something like Adobe Premiere, you can just compile your render .tgas (or whatever else) into an animation and have complete control over compression setting. =]