What you need is a MPEG1 to MPEG2 convertor. There are no free MPEG2 encoders (afaik). TMPGEnc is the cheapest.
DAT is a container format used in VCD's. The video is encoded in MPEG1 at 1150 KBPS bitrate. Resolution and framerate are 352x288 25 FPS for PAL and 352x240 29.97 FPS for NTSC. Audio is MPEG1 Layer2 (MP2) at 224 KBPS stereo. Both audio and video are muxed together as a single file.
Use freeware VCDGear to strip a DAT file to MPEG.
Next you will need to re-encode this to DVD specs.
VOB is a container format for DVD. The video is in MPEG2 at upto 9000 KBPS bitrate. Resolution and framerate are 720x576 25 FPS for PAL and 720x580 29.97 FPS for NTSC. Audio can be AC3 ,PCM WAV, DTS or MP2 multi channel. Total bitrate (video+audio all channels) should not exceed 10800 KBPS.
VOB file has other components too like .ifo info, BMP's for menus, multiple audio tracks in other languages, navigation info and subtitles BMP's.
TMPEGEnc will convert your MPEG1 file and create a seperate video and audio file. Just use the right DVD template.
Use freeware IFOEDIT, use the author DVD option to create VOBS.
Use NERO (DVD-Video template) option to burn your DVD. Put all the files created by IFOEDIT in the red VIDEO_TS folder. Burn.
Tip:
Use non standard DVD compatible resolutions and bitrate when converting from VCD.
For PAL
720 x 576 pixels MPEG2 (Full-D1)
704 x 576 pixels MPEG2 (Broadcast D1)
352 x 576 pixels MPEG2 (Half-D1)
352 x 288 pixels MPEG2
352 x 288 pixels MPEG1 (VCD Standard)
The last but second one is most suitable for your purpose. Assuming PAL VCD. This will allow you to fit more movies.
Using a higher bitrate is not recommended as your original file from VCD was encoded at a lowly bitrate. Around 2000 KBPS should suffice. Load a standard PAL template in TMPEG (Use TMPEGEnc Express version3x) and manipluate the resolution and bitrates. Select output as ES (elementary streams) to get seperate audio and video files. Select "motion search precision" to "high quality"
Edit (Add) - DVD spec allows you to use MPEG1 upto 1800 KBPS, but I haven't tried this so can't say if it'll work. If it works, you can save yourself the trouble of converting the video.
Keith