that is defanatlly your problem right thier. 3.86 gb is not enough to deal with dvd. That 700mb file when converted to mpeg 2 might fit on a 4.3 gb (or whatever) dvd, but you have to have enought space on your hard drive for that 4.3 gig that is going onto the dvd plus you need hard drive working space for your computer programs.
In all honesty, plan on either having half your hard drive empty
start deleting stuff), or beter yet, get another hard drive.
By the way, what is the model of you aopen dvd burner? I hate to tell you this, but while the aopen dvd burners are exelent (very exelent) cd burners, they have some issues with dvd. Unlike most drives, thier is not a forum here for aopen drives(sorry but they are too crappy to deserve a forum of thier own).
Before you look at a new dvd drive though, first consider that you need more hard drive space first, for any dvd drive to work.
Second, consider that I am one of the three people that support the aopen drive on this forum.
Here is the thread
Your drive is an exceptional cd burner/reader. Your drive is probably a very good dvd reader (and yes that makes a diffrence). Unfortunatlly, your burner has good hardware, but mediocre at best firmware to support it. I am guessing that from your system, your money is limited (and you need a new hard drive). Please take the time to read thorugh the aopen thread (glance through it, I wouldn't expect you to read every word).
If you can afford another dvd burner, get one (nec, benq etc), if not, I'll try to help you make it work (solid burner, just crappy firmware). I'm sure that we can make your drive perform well (it can perform well, it is just that your media choices will be limited). feel free to pm me. I have very little free time sometimes (10 week old baby, full time job and a weekly post I do here), but I'll get back to you eventually.
Eventually, ok that sounded really crappy, I'll get back to you as soon as I can?!?