Below are the steps to do things manually in 2.5, but the steps in 2.6 are very similar, so you should be able to follow along fairly easily.
2. Remove the Audio from the video: ziin's guide (http://osu.ppy.sh/forum/viewtopic.php?f=56&t=58235) outlines this very well, so I advise you just follow his instructions.
3. Select the Video encoder to be MPEG-4 AVC and configure it: 2.5
2.6
As stated, click on the pull down menu and change it to " MPEG-4 AVC." Afterward, press on the "Configure" button below. You will be greeted with a screen that has bunches of tabs, options and what not.
I know none of you want to deal with configuring this, so here are some preconfigured settings
http://puu.sh/ZePP . Place this file in C:\Users\<username>\AppData\Roaming\avidemux\x264 . If for some reason you cannot save the file from that page as a .xml file. Create a .xml file in the location specified and copy the lines in.
With the file in place, click on the top of the page and scroll down to select the name of the .xml file added (if you used mine, it is "quality 5"). With that we are done with configuration (that was easy), but if the filesize is too big or you want to push out more quality, feel free to adjust the quality slider on that page to your hearts desire. Afterward, just make sure to press "Ok."
4. Applying filters:There are plenty of filters to choose from, so here is the set of filters I used for one of anime filter sets. Feel free to adjust the filters to suit your needs.
To start off this process, press the "Filter" button under Video as shown above.
Now apply the following filters in the order listed:
(Format: Category > Filter)
Sharpness > MSmooth by Donald Graft: High Quality, Threshold: 15, Strength: 3
Noise > MPlayer hqdn3d: stock settings (settings it starts with)
Sharpness > asharp: Threshold: 2.00, Strength: 2.00, Block Adaptive: -1.00, Do not check High Quality Block Filtering
Sharpness > MSmooth by Donald Graft: High Quality, Threshold: 15, Strength: 1 (to clean up oversharpening)
Noise > Cnr2: stock settings
Noise > FluxSmooth: Temporal Threshold: 8, Spatial Threshold: 8
Noise > Temporal Cleaner: Luna Temporal Threshold: 5, Chroma Temporal Threshold: 0
Transform > Resize: Whatever resolution you want that fits osu! standards, but I do recommend Lanzcos3 as your "Resize Method" (If you want a slight speed boost, switch to MPlayer resize)