MP4 is also a container (tech term = wrapper). It can hold any number of formats. So what sanlyn wrote still applies.
Furthermore, WinAVI is horrible cheap chinaware software. That didn't help at all. You need to convert each clip to the desired format separately, using quality software like
Avidemux. Then join then in
Avidemux as well.
If making DVD, then MPEG-2 to DVD-Video compliant specs.
After conversion, use an authoring tool to make the DVD.
And a burning tool (
Imgburn) to burn the disc.
Yes, more steps, but that's the difference between all-in-one cheapo software that gives you problems, and doing it the proper way.