there are 2 ways to do this:
1. the easy way - IF your DVD player can also play DivX, Xvid, Mpeg4 and so on, just compress the avi to one of those formats, burn the stuff on one CD, avi and .srt in the same folder, and there ya go...
2. If the DVD player doesn't know about Mpeg4...only pure Mpeg2 DVD format, heh, that's the hard way, the only program i know of that does OK at putting .srt filez on the avi and convests all to Mpeg 2 is TMPGEnc. However, it RENDERS the.srt over the video, so it's gonna be there forever, no way to take it out... link here
http://www.tmpgenc.net/e_main.html