Difficult to answer until one knows what type of avi the camera outputs.
When you do your test...start by matching the (1280x720p/24fps )
Maybe an HDV Preset to start with.
...worry about the DVD settings later ...after you find out if you can edit the camera footage (at all)
Nikon uses MJpeg.
Make sure you turn off Frame Blending.
CS5 has native DSLR editing presets!