It looks like Tinkster forgot to paste in a link.
One app that should be able to do this is vncrec. The vnc file is encoded to avi using transcode.
The toy I really wanted to recommend is pyvnc2swf. Unfortunately attempts to convert the swf to avi were just not sharp. Examples of desktop recordings using this can be seen here;
Pyvnc2swf makes a swf file and a html file. For portability these files can be copied to a cd. However they need to be played back in a web browser, possibly not practicle for you're purposes.