damn I was all set to show you how to do it.. but I don't know the free stuff..
I use Encore..
basically you want to make sure that whatever program you are using transcodes the avi into mpeg-2 containers with no more than 8,000 kBps.. which will allow the dvd to play on 99% of players. Just take note that if your avi isn't lossless then encoding/transcoding isn't going to increase or enhance the look.
a quick google search gave me this
Sothink Movie DVD Maker - Free DVD Maker, Video to DVD
but I'm a big believer in that you get what you pay for when it comes to this stuff.