d2v files are frame indexes for mpeg2 video. You can't create a d2v file for an avi.

HCEncoder accepts either .d2v or .avs input, so to use it on your project you'll need to install AviSynth and create a simple script to tell it what video to load. The command for this is AviSource("path for your video file"). The .avs script is just a simple plain text file with the extension renamed.

As ChainsawAsh said, 3:2 has to do with the frame rate, not the aspect ratio of the image. Valid dvd aspect ratios are 16:9 and 4:3.

If your video source is film-based, you'll want to encode as progressive video so you don't waste space with repeated fields. The rendering is still ultimately interlaced, but properly set this way it will be easily de-interlaced back into the original frames on a progressive display. 3:2 pulldown and 16:9 aspect ratio should be flagged into the video stream during the mpeg2 encoding stage. On a display supporting 23.976 fps, the pulldown flags simply identify which fields belong to which frame, but the speed alternation does not take place. However, sophisticated de-interlacers do not rely on the flags alone because otherwise errors will be seen any time there is a cadence change or other irregularity; instead they analyse the image in advance and base their frame assembly on algorithms that identify patterns of change in the video.