I understand. The only reason I was originally using the VIDEO_TS format because this was required when using swisscenter to serve media to the Pinnacle Showcenter (.iso doesnt work), before I ever dreamed of using LinuxMCE. I see a lot of potential in LinuxMCE but unfortunately I don't have the expertise to get over these teething problems. I can see 3 options:
a) go back to ubuntu/swisscenter and pinnacle showcenter (obviously not ideal, but would save a lot of hair-pulling, swearing, hitting things, etc)
b) try to figure out the problem in LinuxMCE and fix it, if this is even possible (very time consuming, given my extremely limited knowledge/understanding)
c) re-rip all dvds using LinuxMCE (makes me cry thinking about it)
At this moment in time, I'm thinking c) is the best bet.