FOR THE SHORT VERSION, FOLLOW THIS LINK:
http://nerdwithnolife.blogspot.com/2008/09/how-to-get-high-quality-link-on-youtube.html
You don't have to use the exact programs or file types as in this video - but it is free to do it this way.
Take the guesswork out of your uploads and know they will get the "Watch in high quality" option by watching this tutorial.
To open files other than AVI, use this guide:
http://forum.videohelp.com/topic284288.html
Software mentioned in this guide:
-x264 vfw (just click the exe and INSTALL)
http://sourceforge.net/projects/x264vfw/
-VirtualDubMod (installation covered in this guide)
http://sourceforge.net/projects/virtualdubmod/
-MediaInfo
http://mediainfo.sourceforge.net/
Here is the YouTube video that was encoded during this guide: http://www.youtube.com/watch?v=_05xERpbdHU
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