OK, here's how to do it...
GEt
Vobsub, this will make the subtitles come up automatically, if the .srt and .avi file is in the folder.
Get Vobsub here:
*www.softpedia.com/get/Multimedia/Video/Codec-Packs-Video-Codecs/VobSub.shtml
Creating VCD's with subs:
After installing ffdshow, add the path to the subs file in ffdshow configuration menu. Once the path is added, TMPGEnc will automatically display the subs that's already loadeded in ffdshow. Some ppl use TMPGEnc to convert avi files to vcd compatible format. Also in TMPGEnc environmental settings, priority for direct show should be increased to 2.
THen i guess, u can write in the DVD , but it will come up as a VCD format only but u will get great quality as the previous .avi file u had.
Reference: From a torrent site and also my own