The burner is housed within the body of the iMac (a slot drive). I've scheduled an appointment to get it repaired at the Apple Store on Friday after talking to a tech and coming to the mutual conclusion that it's a hardware problem. I think the writer is failing due to age/use.
It takes an inordinately long time to burn anything and it regularly fails to write dvds as it should, so I think it's toast. The warranty expires in Sept. Might as well get it replaced. But dweez, you're right, this constant need to burn to disc avi and mkv files just so I can watch them in the living room instead of sitting in front of the computer is getting old. If I had a newer tv I'd just spring for a dedicated hd and play the files from that instead.