I never had to make SVCD CD's but last week I had to, for a friend of mine. I used MPEG-2 for the first time last week on a movie of 9 minutes and one of 12 minutes. Both didn't work. After every second or so the picture gets scrambled and it isn't played fluently. MPEG-1 works great.
I have to report the same problem. The strange thing is they will play on the computer that they were encoded on with VV but not any other. It has audio but mostly mixed up horizontal lines.
I am using the default settings. The file will not even play when copied to a hard drive on another machine. All of these test machines have codecs for MPEG-2
Part of the problem with SVCD's is that they are 480x480 interlaced, but the maximum bitrate is only about 2.5 megabits/sec. This just isn't very much in the way of data bandwidth, therefore SVCD isn't going to look particularly good. It will look acceptably decent with noise-free video with relatively little motion.