Ok, I got that nasty error removed by upgrading my version of vobsub to 2.14 (sic). Here's what happens now.

Load movie into vdub (avi, divx 5.02, audio ac3)...that works.
Video compression...divx 5.02
Add filter...vob sub....open idx files, select 04 English, that's it...that seems to work. No errors.
Audio...direct stream copy

Go to preview file...no subs

Tried with proxy on, proxy off...can't figure out what I'm missing.

Slight edit...I forgot to add that direct vob sub works fine, and I can see the subs when I play the file with a file player (ie, the ATI file player).
I was just hoping to convert this to vcd, but it's just not working out.

Anybody? Bueller?

Lizzo