Here's how to do it in Windows 7:
Open the .VOB file with Windows media player.
When it is playing click on the show library option (small icon on top right of playing screen)
Once in library right click on the bottom area of the library window (where all of the file details are shown)
Select File>Save As and give the file a new name and add .wmv at the end
This will save the file as a WMV file which can be embeded into powerpoint presentations.

NB. You may find it saves it to your MUSIC library rather than videos.

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