Conversion takes time. Using high quality settings, vbr 2pass, it takes me 3hrs to convert a 350mb xvid to mpeg2 video and audio streams. You can reduce that time by getting a faster cpu---I'm using an A64 3200+, so one of the new Intel Core2 Duo chips would be a good 10% faster I think.
As for programs, if you are looking for an all in one solution download one of the trial packages from Ulead or Pegasys. Nero Vision is another alternative, as is Adobe Premiere Elements.
If you'd prefer a separate high quality mpeg encoder, then TMPGenc Plus 2.5 or CCE Basic might work for you. CCE is known to be faster, but isn't the easiest program to use for someone new to this. You'd also need an authoring program to create menus and put it in dvd format. I use DVDLab Pro, but it is expensive.
There are free alternatives but they have a much steeper learning curve. If you are interested, I'd look at the forums at doom9.org
AviSynth plus the HC encoder works well, but takes a huge investment in time to learn. Two free authoring programs are GuiforDVDAuthor, and DVDAuthorGui. You can find them at videohelp.com