H.264 encoding in PowerDirector 10
I think MeGUI is supposed to be a good front-end for x264 encoding.  (x264 is the same h.264 encoder that VLC uses.)

I don't know anything about powerdirector, so all I can say is that x264 is the best h.264 encoder (best quality vs. bitrate vs. cpu time tradeoff), and it's free.  It's what you should use to make files for upload to youtube.  (Use lots of bitrate, because youtube will decode and re-encode your video regardless of what you do.)