Thanks Jim and Walt for the suggestions, I will experiment some more.
To aid understanding of my issue, my workflow for this project was (maybe not the best but you learn by your mistakes);
1. Created movie clips using my Panasonic tmc10.
2. The movie clips were copied to pc and imported into video wave.
3. Review movie in timeline mode, splitting where scenes changed.
3. Trimmed each segment in video wave to remove unwanted footage (start and end of clip).
4. Applied audio enhancement to some of the clips where narration levels were low.
5. Applied transition between scenes, except between 2 of the scenes which was in the middle of a song. (I think the split occurred because my video camera can automatically record on an external memory card if the internal memory card is full.)
6. Saved project during steps 1-5.
7. Started MyDvd from videowave, and added a menu, didn't matter which I chose, I tried a couple and using either one the project failed as above.
8. Created "chapters" using automatically detection. Now I recall at this point that the application reported an error. "some chapters were not added due to chapter spacing rules".
9. Edited text and tested within MyDvd simulator.
10. At this point there was a production button which did not "play" the production, but went to the chapter menu. I could not see how to play the video, so copied the "production" button, changing the "link to" properties to point to "all movies in project". However after setting this and testing the button functionality, the property changed to "none", but still functions ok.
11. Burned project to iso, settings as discussed in earlier post. Project failed each time either as iso or DVD, at encode menu stage.
I have just tried increasing the image size to 8 gig, as my hd footage had to be degraded to fit 4.7g and test as an iso. I will also try using the folder method and post back outcome.
I have also tried the repair option advised, which didn't work.
Thanks for your help.
Update: 8gb ISP also failed.