I use the tools that I have:
I check the Audio and video information with virtualdub (its free) see menu item "file" and "file information"
Also to see if its 8bits under "audio" click on "full processing" then "conversion" it will tell you what it is prior to converting.
There are a number of filters available in virtualdub but that would mean reprocessing the video which is not a good idea if its a good DVD rip its probably as good as it will get. If there is noise in the picture you may be able to smooth some out, increase the color or brightness or contrast but dont expect too much. I use these filters after doing a capture if there is vhs/tv noise or to crop the edge noise from my capture card.
Once you test this "audio idea" by trying the output file from virtualdub as input to TMPG, (you should know right away since it will accept the input. Dont process the whole file in tmpg just do a sample. If you think it needs improvement to the video then I suggest reading the posts under avisynth. That's what I am interested in learning. Its more advanced but a number of filtering options seem to be available. So far I have used default scripts posted by others (for which I am thankful) so I am not the one who can comment on these until I get a bit of experience.
The only time I got the error which you reported in TMPG it worked after I converted the audio, That does not mean that it is the only cause of this error. I would appreciate it if you try it and post the results. If you only convert the audio and leave the video as "direct stream" the file should convert quickly although you will need more space for the uncompressed audio.