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The LVW-1105HC series only gives a choice of two methods of inserting chapter marks, both as you mentioned. The first method is to set the "Automatic Chapter Insertion" feature in the recording menu to the periodic time a chapter should be inserted. The second method is to press 'Edit' during the recording to insert a chapter at that position. This Lite-On model does not offer any means of editing chapters in a recording that has already taken place unfortunately.
Just be sure not to confuse chapter marks with titles. Each individual recording you make is a different title and thus appears as a new icon on the disc menu. However, each chapter is a marker in a given title that tells the DVD recorder or player where to jump to next when the user presses the next or previous track buttons on their remote. For example, if you have a chapter every five minutes (the default setting), then when you go to play back the title, then each time you press the "Next Track" button, the recorder jumps to the next five minute mark where the next chapter is located. On the other hand, if you have automatic chapter insertion disabled and pressed the edit button at the times 21:05 and at 49:12 during the recording (as an example), then when you begin playback of the title and press the "Next Track" button, it will jump to 21:05 and pressing the "Next Track" button again will jump to 49:21 and vice versa for the "Previous Track" buttons.
Just in case it is the disc, I would recommend trying a different disc or brand. So far, after writing at least 30 discs in my LVW-1105HC+ (for my review, consisting of DVD+R, DVD+RW, DVD-R & DVD-RW) I have not had an chapter marking issues with any disc.