I have the same problem. The error code in DVDStudio 3 Log says:
In Build
"Encoding Assets...
Error while encoding file:/Volumes/G-DRIVE 1/LONDON 25/DVD 2010/Sequence 1
Build cancelled
Formatting finished.
Building was not successful. See log."
In Encode
"Encoding file Sequence 1.
Encoding of Sequence 1 failed with error: -2"
I tried this second time and it happened again. The first time it happened at around 39% of "Build & Format" completion. It seemed like it happened at the almost end of encoding before formatting. I thought it was a project name or disc name, so I changed it and it didn't do it. Please help
Thanks,
Jay