Assuming you have recorded the DVD and simply wish to rip the contents to a folder on the PC, use DVD Shrink. 'Open Disc' > 'Backup'. This assumes you used a DVD or DVD RW disk that has been finalized on the recorder. If you are using DVD_RAM disks it's not as straightforward.
a good program would be womble mpeg dvd wizard. It works great with mpeg2 files, it'll edit without reencoding (won't loose too much quality). Once you have all your clips on the timeline you can add transitions and decide where your chapters will be. When you create the menu, each chapter will have a thumbnail and you can move a slider to pick the exact scene you want to show on the thumbnail. I still use version 4.0 (still available at lower prices) the latest version 5.0 is more expensive but not that different than version 4.0.
