Help with choosing compression for DVD files

[BooBerry]

For a few years now, I have been ripping my DVD collection and storing it on hard drives. It all began by wanting to make backups of my toddler's Disney movies so she could handle the copies and not destroy the originals (which were back in Disney's "vault"). After a while, I didn't even make physical backups. I just left the rips (made with DVDFab) on the hard drive and watched them with Media Player Classic or VLC. If they were small-ish (< 4GB) I would leave them be. If they were large, I would use DVDShrink to make them smaller (4.35GB). Once I realized the convenience of having them on the drive, I decided to rip all my owned titles. I would omit all menus and "extras" and rip only the movie, "shrinking" as needed. This was working so well, I invested in a PC with Media Center (XP MCE 2005). Everything works well.

But as I continue to buy DVDs, storage space is becoming an issue. I filled 1TB of space and had to recently invest in a second 1TB drive. So I'm beginning to think "compression". Trouble is: I know nothing.

Here's my wish list:
*Good picture quality (I have 61" 1080p DLP and 32" 720p LCD)
*AC3 maintained (PC is Toslink to 7.1 receiver)
*Subtitles maintained and switchable on/off (just 1 track needed, English)
*Chapter Marks preserved
*Playable with Windows XP Media Center 2005

Is there such an animal? I use Handbrake to convert the DVD files to my iPod 5.5 Video, although I don't think this is the solution. First, I can't comment on quality as there is no way to compare a 2-inch screen to a 61" 1080p/32" 720p. I also don't know if Dolby 5.1 is there. I did notice chapter marks are there, but subtitles, I understand, can only be permanently burned in. Furthermore, the info from my MCE2005 suggests that the resulting h264 product could not be played, anyway.

Last night, I tried Auto Gordian Knot. Having read the guide, I was also excited as I also have 1.) a stand alone DVD player 2.) the Iomega Screenplay TV and 3.) An unlocked GPS (running TCPMP) that can play DivX/XviD files. Local compression as well as a format that I can use other places without further conversion seemed ideal. I followed the guide to a T. But the result, while impressive in video quality, was loss of chapter marks and the subtitles did not work. (cannot comment on the AC3, is I just checked it out on my laptop). The subtitle file was, in fact, created (installed WinRar and everything) but did not work. Media Player Classic couldn't see anything. VLC saw it, but gave an error. I'm not sure if MCE2005 would even know what to do (it looked like the subtitles are a separate file?)

So now I come to the experts. I know there there is not (nor will there ever be) the perfect codec and that people can argue forever about which is "better" or "the best". I just need to know if there is a way to bring my wish list into reality, or am I doomed to a future of 8TB worth of external drives.

Any insight would be greatly appreciated.

[Krispy Kritter]

Most of the video players (VLC for example) support external subtitles, it's simply a matter of configuring your player. In the case of VLC it would be helpful to know the exact error. AC3 should also work, assuming you have the correct codecs installed.

As for compression, it will be a matter of experimenting until you find the settings that work best for you. You used fixed file sizes which can result in files of varying quality or simply use a fixed quality, and have files of varying sizes.

You could also consider using h.264