I assume you mean the TMPGEnc encoder? That's what I'm using; the only problem I ran into was the one I described in my response on the other thread ("Problem Burning to VCD").
Strangely enough, while trying all kinds of tools to fix the problem I described, I encountered a different MPEG encoder that would refuse to extract audio just as you describe. There is something slightly messed up about these files but most encoders do work. I would suggest just trying different MPEG encoders until you find one that works for you. Or, you could try extracting the audio with a separate program such as ffmpeggui and just using your MPEG encoder to do the video. With most DVD authoring programs, you should be able to recombine the audio and video in the DVD authoring step.
However, TMPGEnc does work for me ... maybe upgrade your version??