That's a seriously convoluted workaround for a feature Roxio highlights as a main selling point. This is clearly a bug that breaks an advertised capability: "With just a few clicks you can locate, convert and burn your favorite shows, music and data to CD, DVD and Blu-ray discs, or sync to your iPhone™, iPod® and other mobile devices." (from Toast overview page)
Also, this process is basically two levels of video conversion, thereby making the process very long and significantly more disk intensive.
Does anyone know if Roxio is actually working on fixing this?