I've been using freeware staxrip to convert DVD Videos to x264 .MP4 files (I rip DVDs with freeware DVDDecrypter first).
staxrip is not that easy to use as Nero Recode, but it allows to use many advanced features so I really like it. Besides staxrip had always been more stable for me than Nero Recode.
staxrip supports chapters. I extract them from DVD .IFO files with freeware Chapter-X-tractor. I use OGG preset for that because I've never had any problem with it especially when using custom chapter names:
Code:
CHAPTER01=00:00:00.000
CHAPTER01NAME=Chapter 1
CHAPTER02=00:06:39.000
CHAPTER02NAME=Chapter 2
CHAPTER03=00:10:21.934
CHAPTER03NAME=Chapter 3
CHAPTER04=00:19:29.668
CHAPTER04NAME=Chapter 4
CHAPTER05=00:24:34.201
CHAPTER05NAME=Chapter 5
CHAPTER06=00:28:24.035
CHAPTER06NAME=Chapter 6
CHAPTER07=00:34:51.835
CHAPTER07NAME=Chapter 7
CHAPTER08=00:47:33.202
CHAPTER08NAME=Chapter 8
I use K-Lite Mega Codec Pack and play .MP4 files with Media Player Classic. This allows me to navigate between chapters and to switch audio tracks.