Okay guys, I've tried numerous ways to do it and this is the ROCK solid way to do it.
Discs (no sh*t right?)
Neo DVD Encoder (for converting AVI/MPG to the neccecary VOB/BUP/IFO files.)
DVD Shrink 3.11 (for ripping a DVD and shrinking it to fit on a standard disc)
Nero capable of burning DVD's
1) Rent movie from Blockbuster, Borrow from friend etc.
2) Start DVD Shrink
3) Insert DVD
4) Compress movie to fit on 4.7GB disc.
5) Burn with Nero.
Yes, it IS that simple.