@nevragain
'Keep dvd compliant video' is grayed only if the input video stream is not compatible with the DVD video standard (PAL/NTSC) you have choosen in Preferences.
If that matches, could you please post here a screenshot of main AVStoDVD form after you have added your mpeg2 clip? Or better, save the project (.a2d file) and copy&paste here the content.
Bye