Handbrake is fantastic, but it sounds like (s)he's using Windows Movie Maker or something, that probably won't import MPEG-4, or even MPEG-2 (which would be ideal).
You really want to be dealing with uncompressed .DV files for editing, any other weird intermediary file like AVI containers or MPEG4s that are really intended for final content delivery are going to wreak havoc with the AV sync (which might even be off in the DVD source to start with) and introduce another level of compression artefacts, that's three once you burn the finished project back to DVD. Ick, ick, ick.
I think FFmpeg will convert MPEG-2 (DVD) video to .DV. If your editing software won't handle .DVs, it's crap, use something else... For the sake of your end results.
