i just meant that would mean my dvd encoding would take longer because the computer is not really going at it....
No this is not true. Your encoding will happen at full CPU speed (whatever Ghz it's running at).
The CPU really is going at it; it just doesnt look quite as impressive because taskmanager thinks it's only using 50% of the available processor power (which would be the case if you actually had 2 seperate CPUs, but you only have one). If your encoder were multi-threaded it would than show 100% utilization in taskmanager but in reality you would only seen a marginal increase in encoding speed (certainly not double) as the 2 threads competed for processor resources.
Not to be rude or anything but technically the only problem is that you arent interpreting taskmanager's output correctly in light of your hyperthreaded CPU.