Sounds like you didn't compress or encode your AVI file first to MPEG2 so the file can be burned then viewed on a DVD.
Once you have authored the .avi file to hard drive, you can use software such as DVDShrink to make it fit into the 4.37 GB of a DVD disc. This, of course, shall lower the quality, but that's the law: the more time you pack in a DVD disc, the lower the quality.
Another popular encoder is tmpginc. Vegas (now from Sony) is a very good editor that includes a encoder etc. ($$$). Sony Screen blast movie studio ($99?) is not bad. Another one is Ulead DVD movie factory that you can see at http://www.ulead.com I have an older version but it is OK). There are ways to get there for free, but that should get you started along the path of confusion...
Here is a link where you can find free encoders to do the job
Last update: 09:24 PM Friday, August 4, 2006