I am using nero 8 and have a movie on my hard drive in avi file format. I can view the film with media player or nero and the subtitles are seen. However, when I convert the film to dvd using nero the subtitles are missing on the dvd.
AFAIK, Nero still cannot add subtitles to a DVD. DVD Flick can be used to convert AVI to DVD format, add a menu and optionally add .srt (and other format) subtitles. You can also choose to burn the disk. http://www.afterdawn.com/software/video_software/dvd_tools/dvd_flick.cfm