The free programs have the trouble that you can't directly upload them to youtube as their formats aren't well converted and you need some like anyvideoconverter as you had shown.
Youtube does a lot of strange things with your content in general though, its usually just testing out what's best. I usually ended up with custom avi with mpeg4.
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There's also expression enocoder which has a free version. I've just tried uploading something on youtube and they seem to turn out well enough on .wmv and maxed settings.
The editor allows a bit more than the usual ones too and it's no trial/watermark version.



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