Note to those who are having problems:

If you are trying to use mencoder with a DVD and are having trouble getting it to recognize the VOB files, replace the input file string with dvd://1

That tells mencoder to encode the first track on the DVD, which is almost always the track with the movie on it. You don't need to specify a drive letter or path; it will find the DVD by itself.

Your input string would be something like this:

mencoder -vf scale=240:180 dvd://1 -o <output file> -of avi -ovc lavc -oac lavc -lavcopts vcodec=mpeg4:vbitrate=230:acodec=mp3:abitrate=64