As far as I'm aware of, DVD Shrink is still one of the best freeware DVD compresssion software at the moment. If it can't read your source disc, use DVDFab to rip the original DVD to your PC and then in DVD Shrink, click the "Open Files" to select the DVD folder on the PC that was created by DVD Fab.
Make any changes you need, e.g. take out the DTS track (if present) if you you're happy with the regular sound track to provide extra space for improved video quality. Click the "Backup!" button. On the first tab that appears, select the folder to store the compressed (DVD5) DVD. Go into the "Quality Settings" tab. Here you can set options to improve the video quality (at a cost of encoding speed). Click 'OK' and give it a short while to compress the DVD.
Finally, use a burning software capable of writing DVD Video to burn the output Video_TS folder, e.g. ImgBurn.