Here's how I have my setup running. All this is certainly open to suggestion as I'm new to doing this with MovieSalsa myself:
ImageSalsa saves a 640X480 still every 30 seconds.
I'm using the MovieSalsa Scheduler to run the timelaspe generation every half hour. Setup for it is very straightforward. Set up MovieSalsa to generate the timelapse the way you want, save that setup, then point the MovieSalsa Scheduler at the saved .tls file.
My MovieSalsa setup is generating a 480X360 timelapse from the 640X480 stills (seems a good compromise for file size vs. image size). I'm using the Microsoft MPEG-4 Video Codec V2 for compression set to 25 on the smoothness, and 500kb for the data rate. I have the FPS set to 15. This generates an ~12.5M avi file. I run the following batch file post generation to convert it to a streaming capable .wmv file using Windows Media Encoder 9:
REM run Windows Media Encoder to comvert the AVI file to WMV
cscript.exe "C:\Program Files\Windows Media Components\Encoder\WMCmd.vbs" -wme "\\Nas1\public\webcam\anolecam01-timelapse.wme"
REM FTP the file to the server
C:\PHP\php.exe "D:\PHP-scripts\ftp-anolecam01.php"
The above script also runs a php script to ftp the file to the hosted web server.
I have Windows Media Encoder set up to generate a 500KBS variable bit rate file at 30FPS, deinterlaced (I'm going to experiment a bit more on this), default pixel format, and the image size output is the same as the input (480X360). This results in an ~6M .wmv file 3:15 long which is what is uploaded to the website.