I’ve been playing with this conversion amongst others and if you want the manual route this is what I would suggest:
[B]MKVtoolnix[/B] to demux the video and audio streams (subs if required)
[B]dgavcdec109[/B] to index the H264/AVC video and create .dga project
[B]eac3to[/B] (with [B]NeroAACDec[/B]) to convert AAC audio to 6-ch AC3 640kbps
[B]AviSynth[/B] to frameserve the dga project to HC
[B]HC Encoder[/B] to run 2-pass variable bit-rate encoding of dga project
[B]GUI for DVD Author[/B] to mux the video and audio and optional subs and author the DVD.
All the tools mentioned are free and can be found at Videohelp.
Sample Avisynth script:
AddBorders(0, 85, 0, 85, $000000)
I’ve never had any problems with audio sync using this method, unless the source audio was out of sync to start with.