Oh my dear pain... K-Lite was recommended for encoding? ;-;
You could have installed
just Xvid... does sanity enter into people's minds nowadays :P. martino otherwise covered up the rest. Lets not recommend K-Lite for encoding (or at all, lol) anymore shall we n_n.
Uninstall K-Lite completely, re-install CCCP, make sure reset all settings is checked at the end. Either follow martino's instructions for setting up the VfW decoders or just install
Xvid which comes with a VfW encoder/decoder.