If you encode your videos using:
Video Codec: H264
Audio Codec: AAC
You will have a Video thats compatabile with Zune, WMP, and WMC with no codecs needed as Windows 7 supports these by default without issue.
(You could even use Xvid if you wanted to, but IMHO, x264 is far superior and worth using over Xvid.)
I prefer the Nero AAC encoder to convert AC3/DTS to AAC when encoding DVD. It gives a very good quality result IMHO.
This requires the Nero encoder, which is free and does not need to be installed. But your vide encoder will need to be able to support it as well.
Just drop the Nero encoder in the folder,point your encoder to it, and tell it to use it for encoding AAC.