Incompatible Format Errors in DVD Studio Pro

Recently read the manual for DVD Studio Pro but am having some problems. Here it goes.

First issue - I am making a SD DVD. My video assets are Quicktime Files (codec: H.264) at 720x480 29.97p. When I try to import I get the incompatible format error. What am I missing?

Second issue - I tried making a program stream MPEG 2 (with the assumption that the Integrated MPEG encoder would convert to elementary stream). So I went to Compressor with my timeline straight from Final Cut, submitted the batch (not changing any settings except from "Two Pass VBR" to "One Pass VBR" because my video doesn't have much motion), but when I tried importing the file, I received the incompatible format error.

I've scoured the DVD Studio Manual for clues, as well as forums here and elsewhere but have found nothing. In the manual it says that "if you import a QT file asset whose video standard is different from the project's current setting, the Integrated MPEG encoder automatically transcodes the asset to the project's video standard while encoding it." Are there exceptions to this? (like if the scan type is progressive or audio codec is AAC?) Any advice would be greatly appreciated.