Geo Vid Guy,
Half an hour is not enough time to attract the answer you want. Please note that this is not tech support ... nobody is "on duty". You have to wait till someone who knows about your issue spots your post and decides to help.
I never heard of converting PCM to AC/3 and don't know if it can even be done. What you are asking is very complex. It may be that this sort of thing is done at the authoring level of the original DVD, and not easily accomplished by consumer level backup software.
PCM tracks sound fine if you run it through a good receiver/amp to be matrixed into 5.1 channels and output through your 5 speakers and subwoofer.
EDIT: Good post deanimator. Don't see you around these parts very often. You obviously know what you are talking about.