Your CPU is rather slow to do mpeg encoding.
To create menus you can use TMPGEnc DVD Author, that take mpeg files and convert them in vob files with menus.
Another is DVD Lab Pro. Both too bad are not free
Another solution could be to buy a standalone player able to play avi movies too; these days can be found some cheap ones. These standalones don’t need to vreate menus, because already have simple menus included in firmware. I mean that if you insert a dvd containing more than one avi, the standalone player will open a menu containing all the disc contents, and allow you to select the file you want to play.