The only way I know how to do chaptering is with Nero Express. I have a prerecorded dvd with the vts files and transferred those to a folder with nero recode. But from there, the only thing I can see to do is get it into avi format so that Nero will see it and then do the cpatering. How can go from the original dvd to avi? The disc is of a lecture, there's no copy protection or anything on it.
You might want to try ChapterEdit http://forum.digital-digest.com/showthread.php?postid=445013#post445013