TMPEnc has too many settings to cover here, but if you reduce the FPS, frame size and bitrate then you will get an acceptable video in a small file.
You need to make sure that the TMPEnc output video settings are for system MPG and not VCD, otherwise you'll always get the VCD rate (something like 1.1Kbps) resulting in large files.
As an example, see http://adam.buckers.users.btopenworld.com/TwinStar.mpg
This was cut down from a 15Mb AVI file.
Any more questions, probably best to PM me.