I've encoded many vids and put them on the web as .avi. I have had no problems with others not being able to view the vids. Anyways...
Go to File > Export Timeline > Movie
Then you will get a window asking to save the timeline. Name your video. Click on settings.
Under General, you will see 'File Type'. Make sure Microsoft AVI is in that box. Now move to the Video menu (where General is displayed) and select your DivX compressor there. Click on Configure. I just use 1-pass for the variable bitrate. For the Encoding Bitrate, keep it at around 100-700 kbs. Just play around with that slider until you get the right wuality and file size. Click OK at the bottom, OK in the Export Movie Settings window and then hit SAVE.
Hope this helps..
-Randy