This how-to guide will help you to easily cut out clips from a DVD and convert them to AVI, MP4, WMV, etc. using only free software.

Tools required:
DVD Shrink
WinFF (or Xvid4PSP or Encode360)
DVDFab Decrypter if you want to rip DVD from newer commercial DVD releases

Cut out clips from DVD
In DVD Shrink Open Disc (or choose File->Open Disc Image from ISO file or File->Open… to open a VIDEO_TS folder on your HDD) and DVD Shrink will index the DVD. If DVD Shrink wont read the DVD then try LATEST DVDFab Decrypter to rip the DVD to your hard drive.

Select the main movie.
Just choose one audio track
Click on Re-Author to start CUT.

Select the Main movie title and drag it to the DVD Structure.
Click on Set Start/End frames button to cut.

Set start and Stop
You can add more clips from same movie by drag the Movie title again and cut it, each clip will be one file.

Last hit Backup to save the clips
Output to Hard Disk Folder

Convert
You can now use several tools to convert the VOB files from DVD Shrink to other video formats. Like WinFF or Xvid4PSP to convert to AVI or MP4(like for Ipod, PSP, Xbox 360, PS3, etc) and Encode360 to convert to WMV.

Convert to AVI, MP4 using WinFF
WinFF, easy to use and can batch convert but you can not crop and add other filters.
Add all the VTS0X_1.VOB clips from the VIDEO_TS folder that DVD Shrink made.
Under Convert to choose the profile you want to convert to like
AVI with XVID 16:9(choose 16:9 if you source is anamorphic, check the back on the DVD cover)
MP4 with H264

Convert! A command line window will popup and show you encoding information, do NOT close it until it’s done.

Convert to AVI, MP4 using Xvid4pSP
Xvid4PSP is easy to use and has more settings like cropping but no batch mode.
Click on the DVD and choose the VIDEO_TS folder that DVD Shrink made
Choose the Title you want to convert
Select a Format, Video and Audio Codec
Under Video->Resolution/Aspect can you easily resize the video
Encode!

Convert to WMV
You can open the VOB directly in Windows Vista Movie Maker if you have installed ffdshow. Or else can you use Encode360, open the vob and convert to WMV.

Convert to MPG
You can just try rename the .vob to .mpg and it should work fine in most DVD/mpeg players and mpeg editors. But you might sync problems because of ac3 audio delay. You can then remultiplex it to mpeg2 using Xvid4PSP, open DVD and choose the VIDEO_TS folder from DVD Shrink, select title and then choose MPEG2-PS under Format and under video and audio choose Copy. Encode.

Problems
DVD Shrink does not support newer commercial DVDs. Then try use LATEST DVDFab Decrypter and rip to an ISO file or to folder on your HDD.
In the free DVDFab Decrypter choose your DVD Drive
Set output target and click on the folder-icon to output to folder(VIDEO_TS) or the image-icon to output to an ISO-file
Then open the ISO or folder in DVD Shrink and cut as above.