If it's a multiplexed MPG file play it in Window's media player and then "pause" it.
Minimise but don't close the media player window & then start DVDit. Load your MPG to the media theme in DVDit via the "Add files to theme". If that loads successfully you can then close the Media player window.
If that doesn't work try this
a. Import a scratch mpeg file which is known to work into DVDit.
b. From an explorer window, rename the scratch file.
c. Take the "broken" mpeg file, and rename it to the known good file name.
d. Now, drag the movie icon into a menu, and it should work.