I tried encoding a Divx/ac3 into mpeg-2 WITH subtitles.
I separated the audio from video, and used Headac3he to get a WAV file.

I then tried applying subtitles to the Video (Using VirtualDub I tried frameserving to TMPGEnc Plus 2.5):
1. once, through TextSub filter (using a *.sub file) - Absolutly no sync
between subs and sound. I took up a suggestion I found here, and tried messing with the timing (with Subtitle Workshop) without any luck, it appeared to be frame-rate related. However, the subs and the divx were in the same framerate, and even after playing with it it DIDN'T WORK.
2. Second, I tried with Vobsub filter: no luck! Subtitles wouldn't even appear.
3. Third, I tried with Subtitler filter (*.ssa only), and again - no go. won't even accept the subtitles.

I even tried with another set of subtitle file I found and no luck!

Since the subtitles were in perfect sync using the Subtitle Workshop and only seemed to be out of sync when frameserving, I tried a different approach - I tried to Submux the two pieces together, then frameserve (Using DirectShow) but the subs didn't show.
I even tried directly playing the muxed file into the Tmpeg Encoder (not recommended, but still...) and no go!

My last approach was to encode the file WITHOUT the subtitles, and then insert the finished de-multiplexed file into IFOEdit. I converted the *.srt file into *.sup file (using SRT2SUP) and patched the whole thing up with IFOEdit. Therefore, I have the VOBs and IFOs, but they still show nothing (I could tell that without burning, by using Ulead DVD Movie Factory 2, and importing the VOBs into it).

So far, a complete failure with the subs. Any suggestions!?