Incidentally, to resize the video:
Go to Video > Filters
A window pops up showing the installed filters. Click “resize”, then OK
Another window pops up. Enter the new width, new height, and resizing method. Scaling down, apart from nearest neighbor, it doesn’t really matter which you choose. Should you ever need to go up, generally stick with Lanczos. Click OK.
The filter’s added, you’ll see the change in the output pane.
If your goal is to reduce the file size, there are two other things you can do besides greater compression:
You can reduce the frame rate. Go Video > Frame Rate.
Check Convert to fps, then type in a number smaller than your current fps (probably 29.97).
You can reduce the file size this way, but the slower the frame rate, the more choppy the video.
You can make the file easier to compress by smoothing it. Most compressions work by only recording the information that changes between frames. If you minimize the motion in your videos, you can greatly increase their compressibility without sacrificing detail. There’s no single way to do this and it takes a lot of playing around to get the results you want–and maybe more time than you’re looking to spend just for YouTube.
The smoothing filters that come with VirtualDub are pretty basic and not of much use, but you can try them out. “Smoother” attempts smooth out the tone within frames without blurring the edges (stress on “attempts”). “Temporal smoother” takes each frame and blurs it a bit with a number of previous frames to smooth out subtle changes in tones (it also makes ghost images on everything moving quicker than a snail’s pace).
Using just those, don’t expect miracles in terms of image quality. You’ll want a good third-party adaptive smoothing filter if that’s a real concern.