What program, or utility did you use to convert the .vob files to .avi, and what was your target codec? I typically use SUPER Converter, which is free and very versatile, to convert program stream .vob files to a useable format that PPCS4 is compatible with. You can also directly import and edit a .vob file from a DVD in PPCS4 by simply changing the file extension to .mpg. However, doing so will eliminate the audio channel from the video clip in PPCS4.
I was able to recreate what I believe was your issue when I tried converting a .vob file to an .avi file, regardless of what codec I used. I had no issues what so ever when converting the .vob file to a .mov file using the DV codec, for example. It could be a bug with PPCS4 because the same .avi file I created with the DV codec played back fine in WMPlayer, and VLC, but played back almost in slow motion in PPCS4. It might be advantageous for you in the meantime to re-convert the .vob files to .mov files and just choose the standard DV codec.
Remember, you are trying to edit files that are intended for delivery and that were not originally designed to be edited. Attempting to edit inter-frame formats such as MPEG-2, MPEG-4, FLV, etc...has caused many a headache and even today, are not the easiest to work with.
Without further details on WHAT you did, the best guess is SOMETHING.
If you are looking for more help and further details on SOMETHING, better give some information on the steps you took to convert the VOB to AVI.
Program, codec, OS etcetera.