FairUse is a DVD backup software that allows you to create DivX, XviD, H264 avi or mp4 files.
The lite version is free, if you want all features it costs $30 or download. The old free full version 2.8 is Adware. The free version limits target file size to 700MB.
Similar Video Encoding Utilities
These are similar utilities that support MPEG4 including H.264.