In pgcedit you can select the path for imgburn to burn the image when it's created. I never do that.
I'm going to make an image of Jambe Davdar's Returning to Jedi.
Open pgcedit. Press the button on the top left.
Go to your VIDEO_TS folder and press "ok". Pgcedit will scan the files. After scanning press "close".
Press the burn button (don't worry nothing's getting burned yet). Press "ok" when a message pops up (about the 32k stuff).
Then it should look like this. You can select the output path (a different hdd is best).
Press "ok" and the layerbreak options will appear. The light blue one is the current layerbreak as it is marked in the ifo file by the creator. The dark blue one is the one I currently selected. To remove the existing one select it and press "seamless cell". If you select a different one you see the previous one is not light blue anymore. You can now select the chapter point you want as layerbreak and press "ok" (double click to view the chapter).
If there are indeed to few chapters to create a layerbreak I don't know how it will look. Maybe the list will be empty? Or you will get some other message...
Pgcedit is now creating the ISO/Image file. You can burn this file with ImgBurn to your disc.