Files are .vob files aready stored on my hard drive. I though it might be due to the size of the files as they can be over a few gig.
OK... Those are your source (input) files. They are MPEG-2 files from a DVD*.
You need to tweak the MPEG-4 (OUTPUT) settings. You haven't given us the MPEG-4 bitrate, or any clues, like MPEG-4 file size and playing time... But, you did say the files were a fraction of your previous conversions.
So, your MPEG-4 bitrate is most-likely the problem.
If you use the maximum iPod bitrate of 2500kbps, a 90 minute movie file will be a little more than 1.5GB in size. (I don't know if Video Studio allows this setting, and I don't have it on this machine, so I can't check right now.)
I think ~1000kbps is more common for "movie quality" on an iPod, which means the same 90 minute movie would shrink to less than 1GB.
MPEG-4 is more efficient compression than MPEG-2. You should be able to get the same quality in a file less than half the MPEG-2 size (i.e. half of the MPEG-2 bitrate). You don't need full DVD-quality on the small iPod screen, but if you squeeze it down to 1/10 of the original size, the quality loss will probably be noticeable. (And, there is always
some quality loss when converting from one compression scheme to another.)
* Note that Video Studio has a
DVD Import feature. It will allow you to import the VOBs as one continuous MPEG-2 file. (Assuming it's not copy-protected.) If any movie/program on a DVD is more than 1GB, The program will be split into VOB files that are about 1GB. (The main movie on a commercial DVD is typically split into 4 or more VOB files.) If you try to splice VOB files "manually", you will usually not get a smooth splice.