Transcoding is a resource-intensive operation. You should NOT use two programs to transcode two different files at the same time. It will slow your computer down to a crawl and may very well be why you are having sync problems. One of the reasons that can occur is if you're overworking your computer during transcoding. Some programs need all of the juice your CPU can give. Check out what percentage of your CPU the program is utilizing in Task Manager. If your computer is sluggish, I would leave your computer alone during transcoding.
Nero should give you relatively fast results. Transcoding is also a slow
process. The program I use gives excellent results and takes about 5 hours for a full length film. That's using multi-pass encoding, which gives better results than any 'one-click' transcoder, i.e. Nero, WinAvi, etc. can give. Many people run these apps while they sleep.
VOB files are indeed the format you will burn to DVD.
On to codecs...I use a free program called AVICodec. I simply drag and drop my files into this program. It tells me what codecs I need, whether or not my system has them, and has links to the appropriate websites where I can download the codecs! Pretty amazing if you ask me.
Hope this helps
P.S. Here's a guide by Sleepless on Making a DVD with Nero 7