I have the same type of the problem. If I choose the subpicture, then whatever the options are, the subtitles do not show on the movie (directly rendered to movie). I have tried different players (WMP11, VLC), the result is the same. When I choose subpicture in small preview window inside DVDFab, then it says “none”.
I have tried to reinstall the whole software. After that originally subtitles appeared, but not in language I chose (Estonian), but original English ones appeared. The problem is not movie specific, I have tried it with many DVDs I own.
The movie type is usually generic - have tried avi movies with h264 or xvid codecs.
Information: Vista HP, DVDFab Platinum 18.104.22.168 (although trial). I would really like to buy this software because I like the quality of the picture, but without subtitles I have no use for it.