You have got one already if you have any burning software such as Roxio Media Creator, Nero Burning and NTI CD/DVD maker because MPEG1 codec is free.
If you do not have any of those, you can try TMPGEnc which is an excellent software can do both MPEG2 and MPEG1 encoding and MPEG1 part is free click here
For free editing software VirtualDub is great click here. It even has some functions some pro editing packages lack. I think it can do MPEG1 encode as well.
Personally, I think VCD is just waste of time considering you can pick up a DVD writer under £40 and blank DVD discs cost about the same as blank CDs.