Usually I'd recommend
VirtualDub for this task but it's actually far more than you need to fix the problem. Grab a copy of
AVI-Mux GUI and load your video into it (drag&drop it into the top window and click the big button labelled
generate data source from files) tick your audio stream and click start. The file that it outputs should seek/pause just fine, the problem you had was in the AVI file layout instead of storing the audio and video interleaved together your file had the video first then the audio after it. This is caused by either user error or an encoding application that uses a very old AVI writing technique, I'll leave it to you to figure out which it is.
Unfortunately I haven't used DVD Shrink for a long time but it sounds like the audio tracks are labelled incorrectly or inadequately on the original DVD, you'll most likely find that it's a one-off situation and that other DVDs will rip/encode correctly.