What did I use to create the actual MPEG? That would be
TMPEGenc . It's a free encoder. I usually output the video to an uncompressed AVI and convert it to Divx, MPEG1, MPEG2 from there. For encoding in DIVX I use
VirtualDub .
Now if you're talking about the actual editing, I use Adobe Premiere. It's a neat little program, complex enough to do make nice videos, but easy enough to not take forever to learn.
I am still completely lost when using Avid.