I hope the Mods don't regard this as advertising, since i have absolutely nothing to do with this program, but I found "ConvertXtoDvd" worked just fine. It does take some time, and needs relatively expensive Blank DVDs.
Very occasionally you might get a sound sync. issue, but that's about all.
However, another layer of conversion means lowering the image quality that you end up watching. Hardware decoding would avoid this completely, and save time.
If you didn't mind treating yourself to another DVD player, there are a couple of very slim and neat models by Sony that will play .Avi Divx and Xvid amongst others. Only £50 and amazingly good.
Just burn the original .Avi file onto a cheap blank CD with Nero, and pop it straight into the machine. Brilliant!