It's a long process;
"I'm using ProjectX to convert the .REC files to PVA. Then using a program called DVX I’m converting the PVA files to AVI (Xvid)."
(Taken from a quick google search)
You should have recorded it with a program like Fraps or Camtasia.
Those are not the same kind of recordings. A recording in torque logs the position of all the entities on the screen and replays the scene, this is why you can press tab to go in and out of third person while playing a torque recording. It isn't a video, it's the actual game.
As far as I know, the the code for playing them was taken out of Blockland because it was broken. Also, there is no way to convert between the torque recording and a video format except for replaying the recording and then recording it again with screen capturing software.
