If you find your self using WinDvd 5 for it to work correctly, under the current version as of this writing Alpha 35, you will need to not select a SUBST drive in your settings as the directions indicate. As far as the settings in WinDvd source:default and autoplay checked. That fixed it for me.
You have to admit this is the best design for an HTPC I have or could have imagined. If I could only use the random trailers with WinDvd I would be set.