Yeah i am using Nero 6 ultra edition. I have had this for a few months and have only just started using it .
I use a tool within Nero called Nero Express but i am making VCD's not DVD's. Whether this makes the difference.........i'm not sure.
But some of the files i have "burnt" to disc were definitely .avi
When i select the file using Nero a little window opens to tell me that "your video files will be automatically converted to VCD compliant mpeg1 files during the burn process. Ijust click next and Nero does its thing........
There are many free programs which can convert (encode) AVI files to MPEG1 format which is only good for VCD, however there is no free program for converting (encoding) AVI to MPEG2 (dvd need mpeg2) due to licence issues.
What you need to do is to buy a low cost video editing package which includs converter (encoder more precisely). Ulead Videostudio £43.1 is an excellent (and well likeed) low cost video editing package. You can download a trial verison to find out click here