I'll briefly try to explain MP3/Realband and the options (as I have experienced it)

Qualifiers:
Realband uses the codecs 'installed on the system'
MP3 was initiated and owned by Fraunhofer who hasn't improved it in years
Fraunhofer owned the rights and enforced them
LAME is an acronym; "LAME Ain't an MP3 Encoder"
source - http://en.wikipedia.org/wiki/LAME

Installing an mp3 codec can be risky. It is a well known risk since codecs often write to the operating system.

I've had success using the the lame.inf file to install using Windows right-click
I've had success using 'Lame Front End' to install the codec
(this method made mp3 conversion available in RB *and* the Lame Front End program which has some added features)
I've had success using software I've purchased that installed the codec as an included file
I've also had success from the purchased Fraunhofer codec (from long ago) when installed on older systems (up to XP in my experience)

Free mp3 codecs can be risky (did I say that once already?)

Always download from the most trusted source you can find and even then scan it before installing (and after unzipping it if applicable)

The key is to get the mp3 codec installed on the operating system. Then RB sees it as an available option.

Using the LAME mp3 codec in Audacity does nothing inside of RB in my experience, it means you have to use Audacity to convert your RB generated wav file to an mp3 file. Works nicely, but not convenient.
It adds a second step.

RB will only convert to an mp3 if the codec is available on the system. Windows usually comes with a codec included that allows 'playing' any mp3 at any bit rate, but recording or converting is limited to 56k .. this is part of the microsoft agreement with Fraunhofer to my knowledge. The codec is not 'free' even though it appears to be freely used. So using a 'free' mp3 codec always involves some risk (did I say that twice already?)

My most recent success was with Win7 using 'Lame Front-End'. RB immediately saw the new bit rates.
I'd still scan that file first to be safe (OK I said it four times now).
Installing free codecs should be done with caution as they write to the operating system. I believe I used cnet for this particular download.

As another option -
You may find that using the native Windows 'WMA' option is satisfactory; it comes with the OS and is available in the 'Audio-Merge to WMA' option in RB.
However if you require the mp3 format, you may need to make some extra effort using the clues above for installing the codec to your system.

I do not work here, but the benefits are still awesome
Make your sound your own!