MPEG3 doesn't exist. MP3 is MPEG 1 layer 3.
Dunno, did you try installing the newest Windows Media Player 9? That should install some low-bitrate codecs for you, and that worked for me when I was encoding.
Also, you're not using DivX 4, are you? The guide on this site is a bit old, and PocketMVP now supports DivX 5.
Also make sure you have the latest version of PocketMVP (which PocketDivX was renamed to).