The mmv file works in the emulator? If so, then it is good! There is a second method to record a proper AVI. Hm ... finish your PS1 Longplay and then send it to me!? I could encode everything for you.
How does that sound?
DEGA is still an immature emulator, but unfortunately there is nothing better. Currently I am working on a detailed guide on how to get the best results with DEGA. But it may still take some time.