To convert avi in video dvd you need to do two conversions:
First the avi in mpeg, and then the mpeg in vob.
For the first step you need a mpeg encoder, and for the second is necessary a dvd authoring software.
Nerovision contain all necessary tools to do this conversion, and also dvd santa.
My personal suggestion is to use "tmpgenc" to convert avi in mpeg and "tmpgenc dvd author" to convert mpeg in vob.
This is a rather time consuming process, so if you have many conversions to do, I suggest to buy a divx capacle standalone (they are affordable these days).
When you finish the conversion, then remain only to burn all vob, ifo, and bup files on a dvd, and you can use any burning software you like.