Did you remove those SSE3 plugins?

How much memory do you have? If it's 1GB or less, you could try inserting the line:
SetMemoryMax(256)
at the very start of the script.

Yes it's possible to join lagarith-encoded AVIs with frame accuracy. You can encode smaller chunks either by setting start/end points in VirtualDub, or adding a Trim() command at the end of the script.

However, if your PC happens to crash before VirtualDub has finished saving out that chunk, then that AVI will require an index repair to be useable.