1. Encode video and audio into a format compliant with the DVD specs; i.e. MPEG-2 video and PCM/AC3/MP2 audio. The encoded files are sometimes called "assets".
2. Use the assets to author a DVD. This involves multiplexing video and audio together, adding menus, subtitles and chapter points.
Freeware tools for MPEG-2 video encoding include HC Encoder and QuEnc, and Aften is a free tool for encoding AC3 audio.
Free tools for authoring include DVDAuthorGUI and Muxman.
VSO ConvertXtoDVD is a (shareware?) all-in-one solution that has had good user comments.