Is the program Avi2DVD supposed to open in the Windows Command window to encode the MP3 and transcode the video? It looks kind of threatening/unsafe.
Avi2Dvd is a "front end" for various freeware tools and as such, yes, it will sometimes open command windows to run these tools. It is a freeware app and still in beta (version number below 1.0). It has a few "rough edges" as some people have noted. I understand that such behavior may be worrying if you don't know what's going on, but I personally would be more worried about an app which didn't show me exactly what is happening. Trojans, etc load and run completely hidden as a rule. In the Avi2dvd GUI is a check box marked "hide external applications" which you can check if you don't like to see them. (At least there is on my version, which is 0.4.4)