Davidwillis - Sounds like you were doing Single-Pass. See below.
> Drop your VOB file into the Avidemux window. It will say it's MPEG and ask if you want to index it. Say Okay, and wait a few seconds as it does. It then opens in the window. Under the Video button choose your AVI version - Xvid4 for Linux users, MPEG4 for Windows-ers. If you want the AVI to play in a TV-Player, use MPEG4 unless you know that the Players it will be used on can play Xvid4. Chinese ones usually can, but the US-UK-EU Brand-Namer ones often can't.
> For conversion, you can save time and get lower quality, and perhaps Audio out of sync, by using 1-Pass. To do it properly - particularly if you want your Xvid4 / MPEG4 to play at full-screen, use the 2-Pass mode. With that, Avidemux goes through the video and finds where the audio-location frames are, and areas where the digital content is lower (a lot of single colours, sky, ocean, fields) - and where it is high (complex content and/or a lot of movement) - and "maps" all parameters to a text-file.
> On the Second Pass - it works from that text-file to get the conversion accurate and correct. When 1-Pass is used, it can only "guess-ahead" for video-content quality and where the Audio-track might belong. So the Quality will be much lower.
> Under Video, use "MPEG4 ASP (Xvid)", or "MPEG4 ASP (lavc)". Under "Configure" choose Average Bitrate 2-Pass (unless you want to degrade the video, like "shrinking" it - for that, use Video Size) - the Video Quality should be at "1 High Quality", and the Bitrate 1500 ot higher.
> Under Filters you can adjust the Size, Colour, Sharpness, etc. (You can also Add Black Borders so that, say, a 640 x 480 Camera Video plays centred properly on a US-Japan NTSC TV - 720 x 480, or rest of world, PAL 720 x 576.)
> Under Audio - Don't leave it at "Copy" - select "MP3 (lame)".
> Make sure that "Format" at the bottom, is set to "AVI".
>> Convert away...