the easiest way is nero or toast. it will convert the avi into vob files. they will also allow you to create your menus.
How can I do this with Nero 7?
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As I just posted elsewhere:
I have a mpeg file that I converted from AVI to MPEG using TMPGEnc 4.0 Xpress which went fine. I previewed the file on laptop and image/sound quality was awesome. I then went to Nero (Nero 7 I believe) and burnt using UDF as the file was bigger than 2gb. That went fine to my belief. I previewed the DVD disc on the laptop using Windows Media Player and again, the image/sound quality was fine. Went to my theatre setup etc, played the movie and the pixels were 'jumping around' etc, it was unwatchable but the sound was still okay..
I did notice that once I fast foward the video file, the picture quality seems fine, but once I "play" again to resume the dvd, the jumpy pixels start again...
Any reasons for this?