My version of Windows media encoder can't read these files, and I understand I first need to convert/rip it to another format, avi, mpeg or divx .......

There are hundreds of different softwares and formats to do this, what is the best one ?

I've just tried DVD Ripper: makes a mpg file out of my dvd, but I'll have to encode it again to make a wma file - and lose quality I guess.
What is the best way to avoid too much loss ?