File format for DVD archiving

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After a recent conversation with the GF about how we never seem to open our dvd cupboard any more because it is just easier to fire up the xbox and select the films I have stored on my NAS, I have deceided to convert all of our DVDs to digital format for ease of use.

My NAS runs Freenas, I am converting the dvds using a windows 7 based machine, the media player is an Xbox 360 S.

I have tried using freemake to convert them.
I have tried several file formats
AVI - XviD, H264
WMV - VC1, WMV3

I can't really see much difference in quality between them all, and I do want to retain the 5.1 sound, the XviD I created with AC3 audio will not play on the xbox (even though the website says that it should) the WMVs play without any issues but I am unsure about the format as I have little to no experience with it.

Also file size, currently this program is outputting these at about 2.3Gb, which is ok for a few films but I am talking i the region of 250+ films here.

So my questions are

1 - What software is best to use (ripping and converting, freemake does both all in one click)
2 - what file format ?
3 - which codec ?
4 - what file size ?

James
 
H.264 .mp4 format with AAC or MP3 audio, whatever gives you best compatibility for audio unless you want to retain multi-channel support.

Use a variable bit-rate and a 2-pass to help clean up some motion. Bit-rate is really subjective. Size of TV you are playing the archives on, your own perception of lossyness etc.

~2GB a pop does not seem unreasonable, still only half a terrabyte for all of them. You should be able to get closer to 1GB with no real discernible loss in image quality.
 
You are stuck using containers that the 360 supports multi channel audio with then. Should be a compatibility list somewhere.

Edit - Just realised I glazed over the section in your OP about multi-channel audio in the first instance, opps! :D
 
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