I don't know what your problem is. Perhaps your Nero is missing codecs. Visit their website & get updates. Have a look at their section on mpeg2 codecs. For dvd, nero will need to convert avi, etc. to mpeg2 in order to create a dvd watchable on a set-top dvd player. DVD's movies are in mpeg2 format.

I've dragged & dropped avi, avi-divx, mpeg1 & mpeg2 files into Roxio Toast & it's burnt them happily to a dvd.