There is no free software as far as I know that will convert scr to mpg, but there is a way to work around this.
First you download CamStudio ánd the CamStudio Lossless Codec.
Install both and you have a way of recording anything that is seen on your screen in pretty good quality (without the codec the quality is a real bummer).
Go to 'options' > 'video options' and choose Camstudio Lossless Codec. Hit ok:)
I prefer these settings (play around a bit to know what suits you best):
You can start CamStudio and minimize it and then hit F8 and it will start recording.
To stop the recording hit F9.
So you start your screensaver, hit F8 and hit F9 when done and save.
But now you're stuck with an avi file that is huge. Not only in quality but also in size.
So you might like to convert it to a more manageble size and format.
To do so you need FormatFactory.
After installation you open FormatFactory and choose 'all to mpg' or 'all to wmv'.
I prefer 'all to wmv', so I'll use that as an example.
So click on 'all to wmv' and then on 'setting'.
In setting you keep 'high quality and size', but you want a resized video, so in videosize you move your cursor over the rightside of that field where it says 'default' (gives you a lot of options, but if you don't know it is there, you'll probably overlook this!).
Choose 50% and edit to the value you want. I prefer 30%.
I have tried other options, like 640x480 VGA and on top it keeps saying 'high quality and size' but you get a different output file, because I found out it wouldn't play in all my players anymore or the thumbnail would disappear etc. You can play around till you have found settings that suit you, but I tried to get the same kind of output file as Windows Movie Maker makes, because I know for sure I can play that with all my players and as far as I know, when you upload them to the internet everyone can view them.
If you choose a format that uses compression and a specific codec, not everyone will have that and so they won't be able to see it.
Hit ok and then start :)
It will convert it for you and even give you a notification when done (pops up in the notificationtray).
And that's it:)
Btw. for conversion to mpg I find these the best settings: