I haven't tried the new Nero so I don't know what options it has. But with Roxio, I have options for encoding both the audio & video. ie: Nero will re-encode the video during the burning process. I would recommend to always use dolby surround stereo audio, & keep your maximum video bit rate at 8 or below. If too high an overall bitrate (video & audio bit rates combined) then many dvd set-top players will struggle to play them properly.

Are you using Nero 6 or 7?

Check your burner options. Once you added the video file to it, there should be advanced settings hidden away somewhere.