I tried to convert a video from VOB format to AVI format. It took me quite a while. This is because there are so many different softwares around and most of them at first appear to be free but attempts to force payment from the users when users really try to do any video coversion.
Eventually I came across this post http://tigredefogo.blogspot.com/2007/05/tutorial-how-to-convert-dvd-vob-mpeg-2.html. It was a life saver. I managed to download the version of VirtualDub MPEG-2 that can edit Mpeg 2 files. as well as the necessary codec AC-3 ACM Codec.
Once done I not only could VOB files to AVI files without stupid watermarks, I could also indicate the exact range of frames (time in minutes and seconds) to include for conversion.
Pasha did recommened it to me before. But I guess the version i downloaded was not extensive enough and I did not configure it properly too. Anyways two thumbs up for Virtual Dub!