Try this. Open TMPGEnc, close wizard. Go to Options>Environmental Settings>VFAPI plugin and raise the priority of Directshow Multimedia File Reader to 2 by right clicking and raising. Failing that, you could try opening the file in G Spot to ensure you have the proper codecs installed.
Same problem here... the difference: The Priority of the DirectShow Multimedia File Reader was already set to 2 and GSpot says "Video: 4CC XviD - 3 compatible codecs installed" and "Audio: PCM - no codecs needed"..
If raising the priority didn't help and you have the proper codecs installed, I have no idea. If you haven't already, you could also try posting over at VideoHelp.com as they are also very knowledgeable on TMPGEnc.