Thanks for your prompt reply Kelley. I implemented your advice by changing and applying the ffdshow audio decoder AC3 setting but the MUX button problem has not been resolved on my laptop with Win7 os. I even installed the latest K-Lite Codec Pack update V6.95 and that didn't resolve the issue either.
It's almost as if the ffdshow audio decoder is failing to launch when I play the VCD files via Hoster on my laptop. The little ffdshow icon does not appear in the task bar
Yet, on my Win XP PC when I play the same files through Hoster the black FFdshow icon does appear in the task bar - hence no probs with MUX in XP.
Back to the drawing board ...