With mencoder:

mencoder "FILE.EXT" -ofps 25 -vf-add scale=320:240 -vf-add expand=320:240:-1:-1:1 -srate 44100 -ovc xvid -xvidencopts bitrate=600:max_bframes=0:quant_type=h263:me_quality=4 -oac lavc -lavcopts acodec=mp2:abitrate=128 -o "FILE.avi"

With ffmpeg:

ffmpeg -i "FILE.EXT" -f avi -c:v mpeg4 -vtag xvid -s 320:240 -b:v 600k -r:v 25 -c:a mp2 -b:a 128k -r:a 44100 "FILE.avi"