Last night I tried to convert and .avi file with DVDSANTA. It was my first attempt such a thing. Every thing went fine (well, almost everything), DVDSANTA ask if I wanted to burn and I did it. The problem is that there was no audio files created on the hard drive (audio_ts folder is empty) and obviously burned on the DVD. Video is perfect however. Just no sound and no error message.
Go here http://www.headbands.com/gspot/download.html and get your g-spot. Open your file in g-spot this will tell you if you have the right codecs on your system. It sounds to me like you are missing an audio codec.
When DVD Santa encodes your AVI file it sounds like it produces a VIDEO_TS folder and a AUDIO_TS folder? (havent used DVD Santa), the AUDIO_TS folder doesnt have to have any files in it. They are produced that way. Its best to include it though when burning, as some stand alone dvd players look for it.
2) DVDSanta not integrating well with the codecs. For that, try change the codec of the AVI (e.g. into XviD), or convert it into another format (e.g. mpeg) before using DVDSanta.
I tried it again with the new codecs and I kept getting DVDSanta to crash after 10 seconds of encoding. I reinstalled DVDSanta on top and the problem was solved. DVDSanta do not crash anymore and encoded my movie WITH audio. Great!