It is a tremendous pain, coming from a mac user, although it is easier on OS X than it ever was in 9. Major's tutorial that Key linked to above is a good one.
Is there any real need to make the VCD? You're going to get a nasty quality loss probably as well as it will take forever.
I would just use the 3ivx codec (
http://www.3ivx.com) combined with Divx doctor (will likely be needed to fix the audio in the AVI to make QT accept it) and play it that way.