It seems there is problem with mencoder installation on your server, check if your server can run the conversion command with out errors

/usr/local/bin/mencoder /home/thewall_net/public_html/video/7.mpg -o /home/thewall_net/public_html/flvideo/7.flv -of lavf -oac mp3lame -lameopts abr:br=56 -ovc lavc -lavcopts vcodec=flv:vbitrate=500:mbd=2:mv0:trell:v4mv:cbp:l ast_pred=3 -srate 22050 -lavfopts i_certify_that_my_video_stream_does_not_use_b_fram es
You can ask the server admin to run the command on SSH prompt or try running it from PHP script as described in

http://forums.buyscripts.in/viewtopic.php?t=351