ffmpeg

basically you want the vob to avi conversion.
(if you look at the dvd there are files such as ifo (info) and bup (backup) etc you want vob which is the mpeg stream )

ffmpeg (free open source software) it is command line based however

also Ive used Winff which is a frontend for ffmpeg
if you dont want to use the command line.

its free - and worked a hell of a lot better than special software I bought at Bestbuy - which offered all sorts of movie file conversions
and backup ability - and in the end I ended up using ffmpeg.

cheers
Petr