You, sir, need software to convert the .avi to a more amenable file (like VOB).
Or perhaps a guide like this.
Depending on your DVD player, you may not have to convert the AVI file at all. I have two Philips players that support DivX/Xvid. I just burn the file to cdr or DVDr and my DVD play works fine.
Try the free app Burn
http://www.macupdate.com/info.php/id/21992/burn
http://burn-osx.sourceforge.net/Pages/English/home.html
Actually it looks like Burn can convert the AVI to standard DVD-Video?