you should have nandub installed on your machine anyway (if you don't shame on you!), that's simply -> File>open, then File->append blah blah, and choose the second part of the avi.
Then you make sure video>Direct Stream copy and audio->direct stream copy are selected, then you go file->save as, and save the joined file.
Then you either:
a) You then use gspot and a calculator to figure out what size boarders you need to add top and bottom when you scale up the picture. ie. PAL 720x350 = 0x206 = 103 pixel boarder at the top and bottom.
You then create an avisynth script to add the boarders on, and apply any filters you wish... this entire process can be simplified by loading your avi into gknot and using its avisynth creation to make a basic avi to modify. You then convert the audio, and figure out how much space that will take, you then give ~100mb to menus or whatever, then you use the bitrate calculator to figure out the remaining bitrate. You then encode in CCE with the calculated settings.
Once you have your encoded audio and video streams you drop them into dvdlab, after making some menu screens in psp or photoshop quickly and hit compile, then you burn.
b) if your a tad simple or want to do something slightly quicker, blindly add it to TMPGenc and ignore all the aspect ratio problems, etc. Aim it for about most of a DVD and hit encode. Then re-encode your audio, and drop the video and audio into dvdlab (making the menu in psp/photoshop)
Both shouldn't take 10mins to setup, but you'll have encoding time on top of that. CCE is much longer but better quality, TMPGenc has a babystep GUI but a worse encoding engine.
As for the specific "
no video problem", you probably don't have the video codec installed, probably only ffdshow which is a decoding filter, not a codec. To do any encoding, you need the specific codec installed. Gspot can tell you if you have the codecs and the sticky topic above your head in this forum has the homepages.
ps. mpeg2 needs to be wiped out

Would be so much easier if everyone had a decent player / xbox.