You can also do it in one step using handbrake. I open the DVD in Handbrake (which has a windows version...I'm doing it in Linux), and do the following:

Change the format to mkv (you can probably leave it as mp4, I believe mplayer can handle this as well)
Picture tab: Set the video to 400 and let the vertical resolution default,
Audio tab: Audio codec -> mp3 (lame)

Click start, then wait for the output. It will be larger than the 400-500MB stated above, but the quality will be really good. If you need a smaller file, you can adjust the slide under Constant Quality (mine defaults to RF:20 (61%)) or set the bitrate or target size.

--vr