what you need to do is preview the source video in DVD2AVI to find out whether or not the source is interlaced. if it is interlaced, then go back to this guide and be sure to follow the instructions about deinterlacing
Ok, so its not an interlacing problem! good, next.. did you use 2 pass VBR, or just a single pass CBR? The first few rips I did were sorta jerky at times of high motion, and this is usually fixed using VBR (variable bit rate) encoding. I think the guide on this site says to use 2 pass VBR..
Anyhow, not to waste anymore time since I believe in doing things the easy way, I suggest you try using Gordian Knot. This software is the best front end for the DivX 5 pro codec I have found. I could do things the hard way, but this program pretty much makes it dummy proof, not that I think you are a dummy.. anyhow, get the software here: http://www.doom9.org/index.html?/gknot-main3.htm