I've been using NeroVision Express (part of
Nero 6) to convert my AVIs to DVD VOBs, then use VLC to convert the VOB to a TS. The transcoding takes quite some time, so I usually queue up 4 or five videos per "DVD" then let it do it's magic over night. Aside from the time it takes (typically takes about 1 hour to transcode 1 hour of video), I have yet to have any problems with this method.
There are a few other options out there that work. A cheaper alternative is
Cucusoft MPEG/AVI to DVD/VCD/SVCD/MPEG Converter, but I found that whatever algorithm it uses to upscale video is pretty weak. The end result is noticably pixelated. This would probably not be the case if the resolution of the AVI is already close to DVD resolution (720x480 NTSC).
I've never used Roxio, so I don't know if it has a DVD authoring bit built into it. If it does, you might want to give that a shot. Create the DVD and save it to your hard drive, then use VLC to convert the VOBs to TS.
Anyway.. that's how I've found the most success with converting AVIs to playable transport streams. Probably not the most elegant of solutions, but it works...
Hope that helps,
TheEndless