Welcome to the forums Deathtest
Now, I'm going to give some hints here but don't expect to be creating a masterpiece on your 1st attempt
BTW is it your 1st attempt?
Ok.
What you have by the name of xxx.m1v is a file with video only.
And there's no way that Nero or any other tool will burn that file.
All you've done so far was done in the correct way.
But now you have to take your audio and join it to the video.
So, use VirtualDubMod to open your AVI and go to the Streams menu.
Choose Streams list.
There it will show you your audio track.
Right click it and choose full processing mode.
Now press the Demux button and choose a name for the file.
Wait some minutes before the operation completes.
Close VDubMod and use HeadAC3he or BeSweet to convert the (most probably) MP3 file to MP2.
Yes a KVCD/VCD/SVCD doesn't support MP3 so you have to convert it to MP2.
Don't worry the quality is very nice in MP2
When you have an MP2 file and your M1V file you're ready to mux (join) them back.
Use bbMpeg/Mplex or Tmpgenc internal tools to do so.
You'll end up with a nice xxx.MPG file and that one you'll be able to use with Nero or VCDEasy to burn.
Please understand that I cannot go and explain the whole process in detail.
In the main page at
www.kvcd.net you will find some guides on your right.
Please read one that mentiones Divx/AVI to KVCD.
There you will learn the whole process in every detail.
Or you can browse the AVI part of the forum.
Ask there and the guys will help you
EDIT: or you can download a tool named DIKO and have it done almost automatically for you. It has it's own forum.
Cheers