It has been too long since I have used winavi (not even 100% sure I have used it as I have used a few converters). I usally use nero and G)-(osters is dead on on how to do it with nero. Does winavi burn it for you or do you use another program and does winavi create menus for you? If it is not creating menus, then you would need to use a dvd authoring program to get it in the proper format. Dvd uses mpeg2 but it has to be formated properly with the proper support files. I am guessing that since you are getting a video_ts and audio_ts folder that winavi is doing that so how do you proceed with burning?
Also, The only osi media I could find was 4x-r and it doesn't look like very good quality.
Even if you are doing the process right, if the osi 8x is as bad as the 4x (osi is an off name so it very liklly is), that could very liklly be your problem.
As far as your burner, by lite, I assume you mean liteon? It might be helpfull to know what model but if it is a liteon, liteon's generally dont like dvd-r media. A safe bet would be some maxell dvd+r 4x just to rule out media. They will be ricohjpnr01. Liteons work very well with these disks with most firmwares (as do many other drives). It might help determine if the problem is media or not, then you can worry later about finding the right firmware, beter, faster media etc. Further, you should find if your drive can bitset (which will increase compatibility with +r's and standalone dvd players). If it is a liteon, it can bitset.