Muxman accepts subs in 2 different format: IfoEdit (.sup) or Scenarist (.sst). When you have a SubRip Text (.srt) format, AVStoDVD converts it to .sup and then author it. You can do that step manually using SubtitlesCreator, a sw that comes with AVStoDVD package. Be careful to setup the screen layout (font, size, position). If your srt file has problems, then SubtitlesCreator should inform you about that.
If CCExtractor supports IfoEdit (sup) output format, you should use that option instead to convert them to srt.
What happens if you feed the m2v+ac3 (not muxed) to AVStoDVD without the srt?
Bye