I've learned a lot, DVD Catalyst 4 tech support emailed me back in about 12 hours, you can edit the supported_vid.dc4 file in %appdata% with notepad and add extensions for different file formats, and that worked, many thanks to Mitch from Catalyst.
Also, DVDVideoSoft is an excellent program.
Mods, please delete this thread if you find it not relevant, but converting tv and movies to a format for the Xoom will probably come up again.