I'm pretty sure it can convert off the hard drive. I used the windows version once, but I couldn't play the resulting file on my zune so I used something else, and that file was on my hard drive . It is supposed to be a good ipod converter.
You can use this free online converter. http://www.zamzar.com
But it can not convert big files and it does not support batch conversion. It can not join files to one file. It can not convert big files.
iSquint is free. It is a iPod video converter. http://www.isquint.org
iSkysoft Video Converter for Mac is also good. It can trim, crop the video. But you need to pay for it.