Encoding VCD in Xmpeg using TMPG (THIS GUIDE REQUIRES READING)
You will need the following software for this guide:
To set up the VideoServer, extract the files to its own directory. Then run the Setup.exe to intall. During installation you can choose which components to install. Since we are only using Xmpeg you can uncheck the boxes for FlaskMPEG, DVDx, and the others. After it is installed you will get a folder called XMPEG 4.2a. This folder should be located where you chose to install it during the installation process. In this folder you should find the cm-videoserver.Xmpeg plugin. Copy this plugin to the directory where you have Xmpeg installed. Also copy the ini files, bbmpeg.dll, pulldown.exe and the wav2mp.exe (must unzip the wav2mp_1_1.zip file first to extract the wav2mp.exe) to your Xmpeg directory.
Setting up Xmpeg
First open the IFO file for your movie
Then you have to select the videoserver plugin by going to the options tab>select output format>Video Server.
Next go to the Global Projections Options from the options tab.

Set the Width and Height for 352x240 and the frame rate to 23.97 fps or 29.97 fps. Both are valid frame rates for VCD but 23.97 fps may result in smoother animation.
Proceed to the Audio section

Set everything up as shown in the picture.
Proceed to Post Processing

Here you want to select RGB as the format because TMPG doesn't support YUY2 or YV12. Then select Bressenham for filtering. Check the keep aspect ratio box and set the input to 16:9 and the output to 4:3 (TV)VCD. Then check the boxes for no crop and no letterboxing.
Proceed to the Files tab.

Choose where you want to save your movie.
Proceed to the General tab

Here you want to select Frames and enter how many frames there are in the movie. To calculate the amount of frames in your movie you can use the following equation: (movie length (min) x 60 seconds)fps (24 or 30). So lets say your movie was 87 minutes long, you would multiply it by 60 and you would get 5220. This tells you the length of your movie in seconds. Then multiply 5220 by 24 if you're using 23.97 fps or 30 if you're using 29.97 fps. In this case we'll assume where using 23.97 fps so we'll multiply it by 24 and we should get 125280. This number tells us how many frames are in the movie. So enter this number in the box. Then set the search size to 30000.
Now we have to set up the video server, so go to the options tab and select output format options.

Select AVIWrapper and leave everything else the way it is.
Proceed to the Audio tab.

Check all the boxes and set the channel mode to stereo and the bit rate to 224. Also check the box for error protection.
Proceed to the PostPro tab.

Choose where you want to save your video file and make sure you rename the extension to .m1v. If you don't, bbmpeg may not mulitplex the audio and video. Next check the box for multiplex audio and video and choose VCD as the format. If for some reason it didn't multiplex the audio and video for you, then you will have to use the basic multiplex function in TMPG and multiplex the audio and video. Then choose where you want the output multiplexed file to be saved. Then press OK.
Now we want to set up the audio player. So from the run tab in Xmpeg select audio player.

Check the box for Dynamic Range Compression and movie the slider over to the right to increase the volume level. You can also check the Multichannel volumes box and set the volume level for rear, center, and front. Press the Dolby Surround downmix buttong for Dolby Surround sound. You can tell if its press if the button appears brighter than if it wasn't pressed. Also check to see if the right audio track is selected but you usually don't need to change this as it should be set to the audio track you selected when you opened the IFO file in Xmpeg. Now press the green arrow button.

Now press the red button and you should get the following window:

Do not close this window or Xmpeg. Now we have to use TMPG to encode the movie.

The video source is the IPCServer.avi file that the video server created. So load that file and select where you want to save the output file but leave the name as IPCServer.m1v or when bbmpeg tries to mulitplex the audio and video, it will not be able to find the IPCServer.m1v file and your movie will not be mulitplexed.
Now press the configure button.

Make sure the stream type is set to MPEG-1 and that the resolution is 352x240. If you set the frame rate in Xmpeg as 23.97, then make sure the frame rate is also set to 23.97 fps in TMPG. The same applies to if you were encoding in 29.97 fps. The make sure the bitrate is 1150 kbps and the rate control mode is set at CBR. For the highest quality video, set the motion search accuracy to Highest Quality (Very Slow). Then press OK and press the Encode button and wait for your movie to finish encoding.
When your movie is done you will have to cut the movie to fit on two CD's.