There are two different tasks that you need to accomplish ripping and encoding. This post is fairly long, and it certainly is not the easiest way to getting your mp3s, but it will save you from the pain and time consuming task of re-encoding your entire CD collection twice (or more) after learning about mp3s. (A bit of pain up front for good returns.) If you need help, you can seach the hydrogenaudio.org forums for information, and the Apple iTunes support/discussions page contains good information as well about LAME encoding.
The bottom line is that the MM encoder, while okay, is actually quite poor in comparison to other encoders (even free ones!). If you care about sound quality at all, I would highly suggest the following:
First, you need to encode the CDs into another format. Mp3 is the most popular compression format, and a good place to start. I started with MusicMatch for my ripping/encoding and it is easy. But, after encoding my entire collection and learning about mp3s, there really is no substitute for a good ripper and encoder (the mp3s sound much, much, much better). My mp3 collection is done this way... (iTunes for the Mac makes encoding/transferring painless, especially with the use of AAC (Advanced Audio Codec)... but until they have one for Windows, this is what I use for my mp3s.)
For ripping and encoding, Exact Audio Copy with the LAME encoder is recommended, and they are free. Do a google search and download EAC. Then, go to the hydrogenaudio.org site. A bunch of developers hang out there, and in the mp3 general forum they have the recommended LAME compile 3.90.3 as a sticky thread.
The install may seem daunting but it is really not. Create an Exact Audio Copy folder in your Program Files folder, with a LAME subfolder, and expand LAME into the subfolder. Then install EAC.
When you run EAC for the first time, click on EAC->Compression Options (on the menu bar) and make sure "Use external program for compression" is clicked, and that the path points to the LAME.EXE file (EAC automatically searches for LAME when installed). Type into the "additional command line options box" the following: "--alt.preset standard." LAME has presets that give better results than specific command line options.
Depending on how you want to name the mp3 files, you will want to go under EAC->EAC Options (on the menu bar), click on the Filename tab, and sort out how you want the files name using the symbols %T for title, %A for artist, etc.
Stick in the CD (the program will automatically call to get the Artist/Title, etc.). and then encode into mp3s by clicking on the arrow mp3 button on the left hand side.
After the mp3s are encoded, you need to import them into the musicmatch program's library. There is a way to have MM search for them automatically, or to add the mp3s to the library automatically when you play them. I haven't used MM in a long time, so poking around should suffice. Then you can upload them to your iPod.
Good luck, and there are several resources including those at hydrogenaudio and the iPod lounge that will help. If you are willing to do some digging, I would use the search function over at hydrogenaudio to learn about this stuff; there is more instructions and technical detail over there than anywhere else. I would spend a bit of time up front learning about these things (trust me, I've spent more time on this than I care to admit) instead of plunging in and making tons of mistakes). Or, you can repost to this thread and I'll try to help you...
I will be reviewing the recommended sites in the coming week. I will be on vaca in florida for a week, then I will hit this hard. I certainly agree that it is much better to do a little leg work first, rather than suffer more pain later.