I think I found out what the problem is (don't know for sure as I'm not too smart on this stuff).
It appears that the AVIVO package only works with X1000 video cards and up (newer). I'm using a Radeon 9600XT (which is older). I'm assuming that the AVIVO package is trying to use the GPU for transcoding? If so, then it probably won't work with my card as it's too old?
EDIT: That must not be it. I just checked you post (fun with avivo) again and it says, "Download the Avivo Video Converter, it's labeled as an ATI only product but since we're only going to use the direct show filters and not the application it doesn't matter what video card you have."