Not my PAL 4:3 profile work. My AC3 was fine as long as I matched the AC3 format to stereo or 5.1 within the "Optimise DVD" file menu selection. Where did your AC-3 come from and if Vegas4, what render profile?
I'm working in PAL, if you choose file->optimize DVd and manually change the audio track to AC-3 it appears to be OK - I am going by the tick box which I think means it will not re-encode.
Apologies to all. My stupidity. I hadn't taken note of the differing default audio formats for PAL and NTSC and puzzled by the warning hadn't bothered to proceed to the Optimize DVD dialog.