wow thats a tough one. Well I dont know a specific proggy you need but i do know this,
1. you need to re encode to a Mpeg4 or .VOB file
2. Then run it through either IFO Edit or a dvd author program
3. If you re encode your quality will be very very poor. B/C it was already compressed video ( not that your going to compress again) But the more you encode a file to another Video format the Quality Degredation just keeps on getting worse.

EDIT: ok try this. run the file through Virtual dub and frame serve it to TMpeg to see if you can make a DVD ready Mpeg. Once you have that get TMpeg DVD Author and just do a simple DVD w/out menu's. Hope that helps