I just ran into this issue on a project as we had to design a dvd system. From my research and a spindle of experience, I found the best process is to export your movie int he best settings you can. Import the footage into compressor and use mpeg2 from the presets. it will then give you a .M2V file that DVD Studio Pro will recognize. Finally you must go into DVD Studio Pro and change the preferences from HDDVD(which is no longer supported) to SDDVD. Then you can select your template or build your own dvd menu. The key it to ensure that you change DVD studio settings to SD as HDDVD settings are not playable in most consumer dvd players.
