I got Ulead VideoStudio 7 SE DVD with my capture card and it's a pretty nice proggy. You can use it to capture video and edit video/sound/some special effects.
It can create basic dvd menus.
It may not be what you're looking for because I don't think it encodes into divx or xvid but you can...
Tell him to get a new monitor,
if it all worked fine at your house and the only difference is the monitor then he needs a new monitor.
I think you already solved the problem yourself there :)