I'm a little confused over this too. My PC has the option in WMP10 to rip to MP3 but the other half's doesn't.
It's causing a problem when he rips music to WMA and then wants to copy it to his MD player as the software that came with it doesn't support WMA!
I've looked for an MP3 encoding plug-in but those recommended by MS charge.
I can't think why mine has the option as I've not specifically installed anything.
I wonder what it could be?