Download GSpot to find out what audio codec your file uses.
Then its just a matter of extracting the audio, converting it to MP3 and then merging the new MP3 with the AVI. You could try using VirtualDub among some audio converter to achieve this task.
There can be many reasons for these failures but none of them have to do with the guide.
First of all, check the DVD media. Are they good quality DVDs or some no-brand ones ? Try to use Ritek, TDK, Verbatim or Maxell.
Next I can see in the loads that Nero fails to find DVD-Video files. Are you files already converted into DVD format (check the filenames in the guide) or just some avi files you are trying to burn to DVD? If this is the error there is a good chance Nero didn't start running thus your DVD are not coasters.
Finally there could be a hardware problem. Remove the 2nd drive from the IDE channel and try again, also make sure the IDE cable is a brand new one.
there are many reasons why the outcome would be bad but usually the most common one is the source media not being good enough to produce a DVD without artifacts.
If you could give more details about the source file (bitrate, codec, resolution) then I can help you understand why the final DVD is not so good.
Do you see in the guide, the image in Step 7 that says "Defer processing" (it has a red 7 by it)?
To do what you want, you need to set the settings for lets say episode 1 and click this instead "Next". Then do the same for episodes 2, 3 etc. And then you can process them all together thus creating a file for each episode.