Nero fully supports MPEG.
What you require are some 'codecs' if you're nero wont recognise mpeg. Try here.
http://www.softpedia.com/get/Multimedia/Video/ Codec-Packs-Video-Codecs/Nero-Mega-Plugin-Pack .shtml
If i remember rightly they need to be installed into neros plugin directory which is normally c/progs/common/ (either ahead or nero folder) /plugins.
If you can't find the common folder, go to folder options and check the 'show hidden folders' box.
Failing that try one of the K-lite codec packs and just install what you need. Too many codecs can cause probs so don't get to carried away.
Colin.