You need to get the material you want to encode into the Quicktime Pro player, and then choose file|export and one of the options will be Movie to DivX AVI.
If the source material is MPEG2, then you would probably want the MPEG2 Quicktime component. I think the decoder version of it is like $40 from Apple.. I'm not sure if it will work on a .vob file though, never tried it.