Is it better to render audio and video separately or can I just click on the "include audio stream" box under the audio tab?
ALWAYS separate. Else DVDA will want to re-encode and it almost always does a horrible job. ALWAYS have the two files (.mpg and .ac3) named the exact same in the same directory (minus the file extension) so when you pull your video file into DVDA the audio automatically populates. To be sure double click the video in DVDA and let the audio populate in the timeline and go back to menu editing.
So render the MPEG-2 .mpg file and then either a Dolby Digital .ac3 or Sony Wave 64 .w64 for best quality but it takes up a LOT of space. You could render as sony wave 64 .w64 and then have DVDA encode as a higher bit rate dolby digital, because for some reason you can't encode dolby digital at 256Kb/s or 320Kb/s while in movie studio, it only lets you do 192Kb/s for dolby digital.