You're making this too hard. Okay, when I mention a tool, you can find it here: http://www.videohelp.com/tools. Enter the name and youll get a description of function, download link, and available guides. Lots of ways to do this.
1) First, if WinAVI has a batch function, use it. (Not familiar with it). That is, add all the files desired, THEN convert. It's evidently authoring to DVD Video structure for you as well as converting. VSO DivX to DVD and The Film Machine have batch capability, for instance.
2) Use your encoder to produce MPEGs instead of DVD Video. Take care they are DVD compliant. Legal resolutions are: 720x480/576, 704x480/576, 352x480/576, and 352x240/288. Second number is NTSC, third is PAL. Tim mentioned VCD rez, which is valid and will enable you to get a lot more run time on the disc. Personally, I'd use half-D1 (352x480/576), you can easily get 4-5 hours on and probably lose little or no quality, assuming source is downloaded AVI or VHS capture. Then author to DVD structure with something like TMPGEnc DVD Author, fairly capable and simple.
3) Don't want to do the conversions over? Just take all your DVD Video files and add them to a single project in TMPGEnc DVD Author. Create menu, set chapters, etc. Ignore any warning about being oversize. Process it. Compress to single-layer DVD size with DVDShrink or DVDRebuilder (Remember half-D1? That option is available in DVDRB).
4) Want freeware only? Okay, revert to MPEGs using VOB2MPEG or Rejig. Then author with one of the freeware apps in the tools link, like GUI for DVDAuthor.
There's oh, only dozens more ways you could do it. Good luck.