Allowable frame sizes for NTSC video are 720×480, 720×486 and 704×480. Nothing else will work.
You have 2 choices:
1. Re-capture your old content at one of those resolutions (720×480 would be best), or
2. Import your 640×480 files into an editing/conversion program and export out avi or mpg files at one of the accepted resolutions. Then import the new files into Encore.
FYI, the $20,000+ Sonic Scenarist won’t accept the 640×480 files, either. Cost of the program is not an indicator of its ability to do anything you want with any format you want. Cost of DVD authoring programs is usually determined by what magic the software can do with compliant files in order to produce stunning finished discs. Nero, Roxio, and others in that price range are limited in that regard when compared to Encore, as Encore is similarly limited when compared to Scenarist.
-Jeff
The Focal Easy Guide to Adobe Encore DVD 2.0