have a look at the tutorials:
http://www.cdrbase.com/forumdisplay.php?s=&forumid=120
as for the sound issue. If using tmpgenc make sure you have the right codecs configured.
Avi divx movies are much more compressed than mpeg-1 & mpeg-2 files.
A 700MB movie should be around 1.2-1.4gigs after converting to VCD... which you would then split into 2 halfs to burn onto 2 CDs.
Also make sure you have selected the avi file for both video & audio source in tmpgenc.
Anymore help just post again and maybe we can get into more details.
Good luck - hope this helped.