On my latest re-intall of Windows I have not installed DivX 3.11a and have found no DivX avi's that I cant decode, yet !
The option in DVD2SVCD in the Misc Tab to tick "Convert Divx3 to DivX4 ..." will be greyed out, so just ignore it.
There are however the odd DivX around that uses DivX Audio, thats when you need to install it, but wait until then.