If you have ripped the movies to the hard drive using DVDFab, you should have removed the encryption. DVDShrink [B]should[/B] have no trouble working with them, but obviously you are having some problems.
One thing to try is to run the ripped dvd video through a free program called FixVTS, before trying to work with them in DVDShrink. You can find FixVTS here: http://www.videohelp.com/tools/FixVTS
What error message do you get in Shrink?
If you want to try a different program, try the free version of DVDRebuilder. It uses encoders rather than a transcoder like Shrink, and will produce higher quality output. It won’t work as quickly as Shrink. http://www.videohelp.com/tools/DVD_Rebuilder