XVid4PSP works fine with AVI, but it never seems to manage converting any WMV properly (tried a lot of versions over time) even though it is officially supported. With compatible source files, it works like a charm - every option you could wish for, quick updates to support changes in PSP video formats, nice interface.
I haven't found something for WMV files yet, at least nothing that works with the resolutions Sony unlocked in firmware 3.30 (fullscreen and beyond). Maybe Super will eventually get an update, that one had the least problems with Microsofts dreadfull video container.