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I'm with Erci. Neither of the programs you mentioned can compete with VirtualDub or nandub. As a matter of fact, XMPEG is a modified form of Flask and hence this cannot be made into a comparison (unless you are asking whether Flask OR XMPEG is better, not taking into consideration the other available encoders).
Edit: On second thought, it looks like you are indeed asking which is better of the two. I haven't used XMPEG, so I don't really know how well it works. However, I have never liked Flask 0.6 very much and would rather use the older, more reliable Flask 0.594 instead...
Techno, keep in mind that I'm simply an anime fan, not an expert fansubber. Besides, there are plenty of good to excellent guides around, so why should I bother making another one that won't likely stand out from the others?
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