main concept h.264 conversion

I have a question regarding this encoder. I am trying to convert from mpeg to dvd format. I slect dvd according to the guide I found on video help. The problem is all it does is turn it into another mpeg, not vts and ifo files. What am I doing wrong? Other than that its a great software and all, but its just puzzling.... you select dvd output on the mpeg type and ya get another mpeg..lol. I didnt try nero to burn it yet, but dont want another coaster. So hopefully someone has a answer. Thank you for youir time