This is going completely from memory and it's been a while...
Most brand name software will only let you capture stills from DVDs...Hollywood copyright protection or something like that. Or it could be technical reasons...a .vob file may be constructed/compiled in such a way that it can't be edited.
I believe if you search Yahoo or Google, you'll find some homemade software that can convert the DVDs' .vob files to an .avi or .mpeg format. The programs are fairly small (20 to 30 MB), and usually cheap ($20-$30 to register...if you don't, you can only convert the first 5 or 10 minutes). After you convert it, you can use brand name editing software (I use Adobe Premiere) to clip out the highlights in .avi or .mpg format, and join them together and add your own music; and finally DVD mastering software (I use ULead's DVD Workshop) to put it all back together in DVD format. Depending on how you're going to use the DVD, be careful with the copyrighted material...
There were more (run the DVD player's video output into a video capture card) and less (use my digital camcorder to record the DVD playing back on the TV) elegant ways of doing it at the time, but I chose converting the .vob file.