Hi Tom1987 and welcome to the forum ,
The .avi file is now a .mpeg file , but the trouble is , that a normal dvd video does not use "just mpeg files".
Because a dvd can have multiple angles , menu's , different soundtracks , and so forth , there is an actual agreement amongst the standards.
The standard is , that all dvd content will be written in the .VOB/IFO/VBO/BUP/etc format , which will have every sound , camera angle and menu item embedded in one big file.
To get your mpeg file converted to a nice dvd vob file , you will need a software product that can do such a thing. I believe Pinnacle Studio can do this for you. Unfortunately Nero can't.