If you're refering to an avi file or something, then after it's been converted to mpeg2 which is what dvd requires, then it will be larger in size. High quality on a dvd5 format 4.7 GB disk is between 60-90 mins or about 110 mins if you use ac3 audio encoding. Reasonable quality for 2 hrs & not such great quality for 3 hrs or more. These 650 MB files you downld are actually designed for easy burning to VCD. In general for that size you're looking at 60-70 or so mins.

So chances are, despite you've set the vid quality lower, it still requires extra space for dvd. Plus if you have the option, choose ac3 audio as that will save considerable space (perhaps 1/5 or less of the space.) 60 mins 16 bit 48 KHz PCM will equal over 600 MB.

Some links to see: http://www.cdfreaks.com/article/114
And see those at the bottom here: CODECs list and alternate players for Movies