Also Known as Auto Gordian Knot, this program puts the VOB files onto your hard drive with no problems.
AutoGK supports DVD/VOBs (unencrypted from hdd), MPEG2, MPEG1, transport streams (including multi-program ones) and AVI/DV input sources. It's great, thousands of people are using it and that says a lot about Auto Gordian Knot.
It automatically detect the input format, so you won't have that problem, supports two audio tracks in AVI, and now it supports HDTV input/output resolutions. High quality will not be a problem anymore.
AutoGK Installer will install everything else that you need. Just choose a folder for the installation, and everything will be taken care of. It also includes optional programs such as the XviD Encoder, AviSynth, and VobSub.
If you already have the most recent versions of them, then you don't need to install them again. If you don't already have them, aren't sure if you have them, or have no idea what they are, then go ahead and install them. You'll need them for your encoding.