There could be a number of reasons you are getting this problem, but the first thing to suggest is that you use the "Automatic Quality setting. Also, you are using the (normal) DVD setting, and not the HD-DVD or Bluray setting?
You can avoid wasting discs by using "create disc content but don't burn" setting, remembering where you put the folder with the content. Using a DVD player software program (WMP should work), open the Video_TS folder, and open Video_ts.ifo
Yes, you can make menus. If you have the "standard" version of Studio, you can only do a simple menu. Plus and Ultimate can do much more complex ones.
Take a look at the help file to get you started with menus, then post back for more info.
and welcome to the forum