ok, did a LOT more testing for you... if any of this has been stated before, please forgive me for repeating it again...
Tested 0.4.8... worked flawlessly.
Further tested 0.4.9: realized I was mistaked when I claimed that it always read the disc correctly the first time... this was simply because I would insert and allow the drive to initialize from my dashboard. After a couple of hours I came up to an error rate of about 75%. When error occurs, it sees a folder called "VIDEO_TS." This folder contains: "VIDEO_TS.BUP" (12KB), "VIDEO_TS.IFO" (12KB), "VIDEO_TS.VOB" (78KB), "VTS_01_0.BUP" (12KB), "VTS_01_0.IFO" (12KB), and "VTS_01_1.VOB" (11924KB). If you opt to transfer this to your HDD it chooses "SEP13011042" as the directory name every time.
Once DVD2XBOX saw the disc in this manner, I left it in the drive and hopped from program to program (boxplorer, evox, mxm, ava, flash fxp) and they would all see it the same way unless a reboot occured. I also hopped from different versions of DVD2XBOX just to make sure... I booted from the latest builds of EVOX, AVA, MXM, and a True Blue MS Dash and the error rate was always consistant.
Finally, I opened XBMP (still looking at the DVD disc, not my HDD), and looked at the disc from its video file browser... it showed the .ifos and .vobs... I attempted to play the files and was actually successful... "VIDEO_TS.IFO" and "VTS_01_0.IFO" both play a video that I have read about on the forums before... some shit happens, forms an xbox logo, then explodes. "VTS_01_1.VOB" also plays this, but I encounter a slight hang with my current settings. "VIDEO_TS.VOB" causes the screen to go black momentarily, then it returns.
Also, I forgot to mention previously that I am using X2 4977 BIOS.
Sorry for the long post, but more information is better than not enough right? Hope this helps you, you have a great program here! If I can be of any further assistance lmk.