Thanks for the reply Husse.
It seems that I'm doing the whole encoding thing backwards, most people encode AVI to DVD, no not me I want encode from DVD to AVI with menus !!!!
Can't find any programs through Google and there is only one that can do it on Windows (TMPGE Divx Author) and that has DRM so wine isn't a option either.
Oh well I will just have to skip from one film/show to another for now, maybe one day soon, some clever Linux fan will make one.