Ady......I had a very similar problem even though I using a different encoder....after I installed DivX6 the quality when down the drain.

I uninstalled DivX6 and the problem still existed.

I re-installed my previous xvid, ffdshow, and AC3 filter and everything went back to normal. Something the DivX 6 adds overwrites something that does not install because it is not part of Divx. I think the XVid re-install actually is what fixed it.....so it must be one of the codecs that Xvid and Divx Share is my guess.....any way....I hope this may help you if have not already figured it out.