Which DirectShow filter is your AC3 handler? (Easy to check in Media Player Classic). And which error message do you get? Since producer uses DirectShow to read AVI files, it should be able to read the AC3 audio when you have a DirectShow AC3 filter installed, that decodes the AC3 audio. For instance, AC3Filter should work, at least it does in the latest helix build of producer in my colleague's office. For now you may have to set AC3Filter to output 2 channels or Dolby Prologic though, since the released version does not handle more than 2 channels (but it does encode Dolby Prologic Surround if the 2 channels carry this).