Convert the WAV audio to AC3, yes. Ulead DVDWS2 actually does have an option to convert audio to AC3, but it can be tricky sometimes.
You convert to AC3 after you've finished your audio work in Premiere, Audacity or whatever you're using to edit the audio.
If your export is a multiplexed ".MPG" file (audio+video together in same file), then you'll just need to demux it to elementary streams (M2V for video, WAV for audio). I use
TMPGEnc Plus to demux, but BatchDemux works, too.
For the best quality WAV>AC3 option, see this:
http://www.digitalfaq.com/forum/show...-ac3-1465.html -- Only $29 for that one.
For a freeware method, see
http://www.digitalfaq.com/forum/show...3-mp2-407.html -- that one uses FFMPEG, which is okay but I suggest
TMPGEnc.
To import AC3 in Ulead, refer to the guide at
http://www.digitalfaq.com/forum/show...-dvd-1506.html as well as some of the posts below it. I know the import process was discussed at length, in detail, with forum member Superstar earlier this year.
You never use the AUDIO_TS folder. It's empty at all times. It is for use by DVD-Audio discs (and on those, the VIDEO_TS is empty, if present).
Yes, stay with VBR for efficiency, if your video is longer than one hour (and being burned to single layer DVD-R or DVD+R media).
.... and I think that covers everything?