I don't think Xvid "lossless" is actually lossless, I'm pretty sure it's just "visually lossless"
I never ever associated the word "lossless" with XVid.
TechSmith has their own video codec that actually does record in lossless while conserving storage space, so you don't have to choose the Uncompressed codec that's default in most codec listings. It's called "TechSmith Screen Capture Codec" and it comes bundled with Camtasia Studio (and its own sub-tools).
Is there a way to disable the view of one of the screens on the PC output? I'd like to have the top screen exclusive on the PC, and the bottom screen left for the device itself; kind of like how the WiiU is structured.
Well you can choose how both screens will attach or separate from each other. When you separate the screens, you can then choose to have the top or bottom screen displaying fully across your PC monitor if you want. I haven't found any way of "completely" disabling both screens, but if you want, you can drag one of the unwanted screens in a corner, or doubleclick on the one you want to display in fullscreen.
And I suppose the most important question; is there any display lag between the system itself and the PC display? Even the slightest amount can be troublesome.
On the system: NEVER, not in the slightest!
On the PC display: As long as you don't have any heavy-duty processes in the background or if you aren't recording anything, there's no lag at all. Even when I just simply had the screens on display with basic processes running in the background, it showed no frame skip or drops whatsoever. It depends on your PC build and/or what you are using currently I guess. Basically, the PC display shows the 3DS in real time, while there might be some frame skips depending on what you do on your PC currently. It's sending signals through micro-USB so that's the kind of speed rate you get sending the screens from the 3DS to a PC. o.o