I ran into the mp3 codec issue a few months. Seems like you need to install an additional MP3 codec to get BIAB to recognize other than the Microsoft supplied very limited codec.

Best bet is to just produce the Wav file and use one of the many audio converters out there to get the mp3 result you want. The Lame mp3 project has a number of easy-to-use frontends to convert a Wav to mp3. Free. I use Foobar which is a audio player and converter. Free.

R