This is normally caused by the Windows MP3 codec not being installed or being disabled.

First, make sure you have the latest version of Windows Media Player install from http://www.microsoft.com/windows/windowsmedia/download/AllDownloads.aspx

If that doesn't solve the issue and you are running Windows XP, you can verify that the MP3 codec is enabled by doing the following:

1. Click on your Start Menu.
2. Click on Control Panel.
3. Click on Sounds, Speech, and Audio Devices.
4. Click on Sounds and Audio Devices.
5. Click the Hardware tab.
6. Double-click Audio Codecs. (figure 1)
   
7. Click the Properties tab.
8. Double-click Fraunhofer IIS MPEG Layer-3 Codec. (figure 2)
   
9. Select Use this audio codec. (figure 3)
   
10. Click OK and close all windows.
11. Start MuvAudio and try converting your files again.

Figure 1:


Figure 2:


Figure 3: