You need an MEPG-2 encoder. HC Encoder is a good free one.

You have two options for encoding MPEG-2 from VirtualDub. You could save your processed video out as an AVI, preferably using a lossless codec, then use that as your source for the encoder. This will need a fair bit of space of your hard drive. The other option is to have VDub frameserve on-the-fly directly to your encoder, without using an intermediate AVI file.

You will also need software to author the encoded files to a DVD structure. The free version of MuxMan is great for producing a bare-bones disc wih no menus.