This error occurred on a brand new install. The route I took to get to this error was:
Minimal Stage 3 install -> X Windows -> KDE
I have attached the build.log and environment files and below is the pqv.
[ebuild N ] media-video/transcode-1.1.7-r3 USE="X a52 aac alsa dvd iconv jpeg mjpeg mp3 mpeg ogg postproc quicktime sdl theora truetype v4l vorbis x264 xml xvid (-altivec) -dv -imagemagick -lzo (-nuv) -oss (-pic)" CPU_FLAGS _X86="mmx sse sse2 -3dnow"
Please let me know if there are any additional steps I need to take or any missing information.