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I have posted in the Tutorial section an alternative DVD to VCD conversion method that supports Sub-Tiltles.
My personal opinion, is with this method the picture quality is not as good as with the DVD2AVI/Tmpgenc (more blocking in dark and/or fast action parts) method but the sound quality is better.
I use this method when ever the DVD2AVI/Tmpgenc method fails for any reason. Its always good to have a stand-by.
Cheers,
CM