Hey James
Firstly, I've had the Internal Muxer Error before caused by a corrupted chapter marker (or more accurately a marker placed on a GOP boundary that DVDSP doesn't like) - I just used trial and error to find the culprit, deleteing half the marker, building, if successful I'd go back to the other half and repeat the process until I found it. I ended up having to put a new marker at the next GOP boundary to get the project to build. Muxer errors could be any number of things though so time and patience are your greatest assets on this one.
Secondly, the 42% encode thing... I always encode outside DVDSP so I've never run into this problem. What you can do if you can't get around this one is to encode in Compressor or QT mpeg encoder (or any other app), then delete the video out of the timeline in DVDSP and replace it with the new mpeg. This way all of your links, chapters, endjumps, etc will remain intact.
Hope some of this helps
Cheers
B