Beginners question about Video Converting.

Hello all,
I recently built a new system, cpu is i5 750 which i have OC'd to 3.8GHz.
I have a passion for watching movies, which i usually download from - average size of around 750MB. They all play fine - for being free.
I recently downloaded DivX, as a multimedia program for watching my films and i noticed it came with DivX Converter. I have bought the PRO version and i am experimenting with it.
I am a total noob at video converting and am looking for some advice on how its done. I am wondering if there is a way i can "upgrade" the quality of the movies to HD or similar. I have tried downloading a 1080p trailer and set divx to Plus HD and selected 1680x1050 resolution, by only upgrading the resolution i increaded the file like took like 30mins to convert and when it was done i noticed no differance apart from it played in full screen with no black lines.
Could someone tell me how/if you can upgrade the quality of a standard 750MB film to a HD or close standard using video convertion?

EDIT: by Upgrading i mean something similar to Youtubes system of being able to upgrade to quality from 360p,480p,720,1080p.
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More about beginners question video converting
  1. To fit a full length movie in a 750MB file, the quality is reduced considerably, once reduced it can not be restored.
    Get a digital camera image of around 2MB and reduce the image to get a file around 200KB, then increase it to make it 2MB again, you will not like the result.
  2. you are going to have to find higher quality videos.

    as far as i know, youtube videos that are watchable are uploaded as 1080p, and then downgraded. i don't think it is possible to upgrade the quality from 360p or 480p all the way to 1080p without horrible results
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