Recently had a few people asking me how to do this to make an AVI file compatible with their player which could not handle AC3 audio. This is pretty simple to do using Avidemux and since it doesn't touch the video - only reencodes the audio in the file - it should only take a few minutes to accomplish.
1. Drag and drop the file into avidemux (ok to click yes/ok to 'index' or 'unpack' to any popups you may or may not get about the file)
2. Click the 'Audio' dropdown and select 'MP3 (lame)'
3. Under 'Audio' click 'Filters' > 'Mixer' > 'Stereo' > 'OK' (if you don't do this you will get an error when trying to save)
4. Click the 'save video' icon (or 'file' > 'Save' > 'Save video') and you'll want to be sure when naming your new file to include the .avi extension in the file name as Avidemux doesn't add it for you, or you'll just have to add it afterward.