From mkv to avi? Conversion help

[Kazuya19]

My problem:
I'm using Sony Vegas 9/10, I have Durarara anime episodes 1-24 extras (BD 1920x1080 x264 FLAC)

From MediaInfo:

Spoiler :

General
Unique ID : 237708825861499432616252038490831293825 (0xB2D50DF8C5201650E379CB47DD598D81)
Complete name : C:\Users\Gebruiker\Desktop\BitTorrent\[ReinForce] Durarara!! (BD 1920x1080 x264 FLAC)\[ReinForce] Durarara!! - 01 (BD 1920x1080 x264 FLAC).mkv
Format : Matroska
Format version : Version 2
File size : 1.00 GiB
Duration : 24mn 31s
Overall bit rate mode : Variable
Overall bit rate : 5 845 Kbps
Movie name : [ReinForce] Durarara!! - 01 (BD 1920x1080 x264 FLAC)
Encoded date : UTC 2012-06-15 04:37:42
Writing application : mkvmerge v4.9.1 ('Ich will') сборка от Sep 12 2011 16:57:47
Writing library : libebml v1.2.1 + libmatroska v1.1.1

Video
ID : 1
Format : AVC
Format/Info : Advanced Video Codec
Format profile : High@L4.0
Format settings, CABAC : Yes
Format settings, ReFrames : 4 frames
Muxing mode : Header stripping
Codec ID : V_MPEG4/ISO/AVC
Duration : 24mn 31s
Width : 1 920 pixels
Height : 1 080 pixels
Display aspect ratio : 16:9
Frame rate : 23.976 fps
Color space : YUV
Chroma subsampling : 4:2:0
Bit depth : 8 bits
Scan type : Progressive
Writing library : x264 core 120
Encoding settings : cabac=1 / ref=4 / deblock=1:-2:-2 / analyse=0x3:0x113 / me=umh / subme=9 / psy=1 / psy_rd=0.70:0.00 / mixed_ref=0 / me_range=32 / chroma_me=1 / trellis=2 / 8x8dct=1 / cqm=0 / deadzone=21,11 / fast_pskip=1 / chroma_qp_offset=-2 / threads=16 / sliced_threads=0 / nr=0 / decimate=1 / interlaced=0 / bluray_compat=0 / constrained_intra=0 / bframes=9 / b_pyramid=2 / b_adapt=2 / b_bias=0 / direct=3 / weightb=1 / open_gop=0 / weightp=2 / keyint=250 / keyint_min=23 / scenecut=40 / intra_refresh=0 / rc_lookahead=40 / rc=crf / mbtree=1 / crf=16.0 / qcomp=0.70 / qpmin=10 / qpmax=20 / qpstep=4 / ip_ratio=1.40 / aq=1:1.00
Default : Yes
Forced : No

Audio
ID : 2
Format : FLAC
Format/Info : Free Lossless Audio Codec
Codec ID : A_FLAC
Duration : 24mn 31s
Bit rate mode : Variable
Channel(s) : 2 channels
Sampling rate : 48.0 KHz
Bit depth : 16 bits
Writing library : Lavf53.32.100
Language : Japanese
Default : Yes
Forced : No

A year ago I converted 720p mkv to avi with TotalVideo Converter but I think I could improve quality

Spoiler :

General
Complete name : C:\Users\Gebruiker\Desktop\BitTorrent\Anime Edit\Durarara!!\Durarara!! - 10.avi
Format : AVI
Format/Info : Audio Video Interleave
File size : 959 MiB
Duration : 20mn 52s
Overall bit rate : 6 427 Kbps
Writing application : Lavf52.39.1

Video
ID : 0
Format : AVC
Format/Info : Advanced Video Codec
Format profile : Baseline@L5.1
Format settings, CABAC : No
Format settings, ReFrames : 1 frame
Format settings, GOP : M=1, N=12
Codec ID : H264
Duration : 20mn 52s
Bit rate : 6 340 Kbps
Width : 1 280 pixels
Height : 720 pixels
Display aspect ratio : 16:9
Frame rate : 25.000 fps
Color space : YUV
Chroma subsampling : 4:2:0
Bit depth : 8 bits
Scan type : Progressive
Bits/(Pixel*Frame) : 0.143
Stream size : 958 MiB (100%)
Writing library : x264 core 57
Encoding settings : cabac=0 / ref=1 / deblock=0:0:0 / analyse=0x1:0 / me=dia / subme=7 / brdo=0 / mixed_ref=0 / me_range=4 / chroma_me=0 / trellis=0 / 8x8dct=0 / cqm=0 / deadzone=21,11 / chroma_qp_offset=0 / threads=1 / nr=0 / decimate=1 / mbaff=0 / bframes=0 / keyint=12 / keyint_min=7 / scenecut=0 / rc=abr / bitrate=6340 / ratetol=0.6 / rceq='tex^qComp' / qcomp=0.50 / qpmin=2 / qpmax=31 / qpstep=3 / ip_ratio=1.25

1 eppie = 1gb, it's not much and it was fine. But DRRR is my main and favourite anime to edit so I want to have better converted files. BUT I don't have space for Loseless footage (yet, I hope) so I have to go for lossy avi (?)
So, my questions: was converting with TVC from mkv to avi a total failure? (files are pretty smooth in vegas), should I use something different? mp4, wmv?
Should I change converter? I tried to convert them with VirtualDub but I'm REALLY bad at scripting - I tried it for almost 2 weeks but it's just gahhh ;___; I just don't understand it. Read few tutorials (one here on a-m-v.org) but it's like Greek to me. Yes, I'm pretty much computer-stupid :O
And I want to be sure I'm doing it right?

So... help me please? *puppy eyes*

BTW I convert whole eppies and this time I want to convert audio too (I didn't need that before)

[Kazuya19]

Can't seem to edit my first post:
I want the output files in 720p, should I convert (+resize) from 1920x1080 or use 720p ones? 2 eppies (12.5 and 25) didn't came out in 720p so I will have to use 1080p source, will it be a problem later? Resizing to 1280x720....

[Mister Hatt]

I swear there was a rule against pirating shit. Actually buy the BD, people will starve if you don't.

[Kazuya19]

I have english dvd's but the quality was bad so I bought BD when it came out =___= It's my fave anime of all time, of course I have them on my shell.
I tried rip the footage to my comp but eps sizes where enormous (yes, I was probably doing something wrong) so I downloaded them.

[BasharOfTheAges]

I tried rip the footage to my comp but eps sizes where enormous

Define enormous. UT video at 720p is about 35 to 45 GB for a standard BRD movie depending on level of detail present.

1080p is about 25GB per normal 22 minute episode completely uncompressed.

[Kazuya19]

I tried rip the footage to my comp but eps sizes where enormous

Define enormous. UT video at 720p is about 35 to 45 GB for a standard BRD movie depending on level of detail present.

1080p is about 25GB per normal 22 minute episode completely uncompressed.

.... woah, that's... ok, they were not that big. I'm sorry I shouldn't have said enormous, I never edited with uncompressed footage, I don't have the space yet
RIght now 12gb per eppie is big for me - I have a 500gb hard drive and it's almost full :O

Moving on, was the compression with TVC bad?
I can't have the best (uncompressed) now, I have to go with good (best lossy I can get)

[Mister Hatt]

Get more HDD space, it's not like disk or memory is expensive these days. Other than that, I guess knowing the basics of containers and codecs will get you sorted if you insist on low quality pirated rips. I'd expect someone to at least download GOOD rips, but hey, apparently not.