I am having a similar problem. I imported 1 main m2v (30 mins), and 2 shorter m2vs (4 mins) into Encore. Every time I go to build, I get the “internal software error” message on my 30 minute m2v. I re-rendered twice, and it didn’t help.Then, I experimented by removing the 30 minute m2v entirely, and encore built my DVD just fine, with the other m2vs still on there. (All my clips had been rendered the same way.)
The only thing I can think is that Encore is having trouble because the other one is longer?
I took your advice and imported this m2v into Premiere and dynamically linked them. This managed to get Encore to build it!! But– The quality was much too low, and lower than my m2vs I had rendered with compressor.
Any ideas?