...what's crazy is the DVD will play on my computer or DVD player with sound?
I'm a bit confused by what you want to play it on?
As far as MP2 audio, an app like Nero Vision would not allow it in a finished NTSC project (which is the correct way to do it).
Not knowing what apps you have DVD Flick (free) should be able to give you a finished DVD with AC3 audio without re-encoding the video portion using your VOBs. Under Project Settings-> Video-> Advanced, tick 'Copy MPEG 2 Streams".