Thanks for the input. That's when I'm going to do capture everything at 640x480 with debut send it to MP4 and then use Videopad for the rest like image stabilization.
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My solution to the problem was to play the video with media player and then use Debut to do a screen capture. I do believe they're doing something unusually wrong in the format but I do want to retrieve what the customer recorded. Maybe there's an easy fix down the road but this works great.
I will say I've had many DVDs where I can just read the entire DVD with Videopad and create an MP4. This is the 1st time I had anytime of audio problem. But this is a good working solution except I cannot read the VOB files directly.