Problem 1: I do not own any DVD's. I will be trying it out today.
Also I tried to play the mini DVD-R in a standalone compatible DVD player and it plays well. No problems.

Problem 2: That may be true. But when I select individual files, right click and say convert to MPEG2. IT creates a file. When I play this file in Media player( 9 series), it plays. The problem is only when I merge all the files in to one and try to make a single movie file.

Any ideas?