anything but

Firstly, I flat out wouldn't re-encode avi to mpeg2, its barbarism of the highest order. The small investment to buy a decent standalone far out weighs the substantial and visible quality degragation, the inconvience and the general tedium and backwards nature of downgrading mpeg4 to mpeg2. I flat out never do it, beyond DV avi to DVD.
However, if your wanting it done right, CCE with DVDlab, if your wanting it done fast, I guess TMPGenc with DVD author.
You might have guessed I do the former when re-encoding, DV capture to DVD.
Then you burn your iso with dvddecrypter.
However, there's something for you to try given how far you are into a messed up system of lower quality transcoding. In nero, set your burner to "Image Recorder", there's button where you select your burner where you can do this in the middle of the gui. Then burn. It will just write an .nrg image file to where ever you tell it to.
Then load this iso into dvddecrypter and burn.
If you can record the image, then you know its your cheap shitty discs that are at fault.
Nero ranks well below TMPGenc and CCE in my experience... its a newbie way of doing things, does the job, but not very well in any stretch of the imagination
ps. For clarities sake, nero doesn't re-encode, its a transcoder. TMPGenc and CCE are re-encoders, and hence why they are far better in the end
