Most VHS to DVD transfer services do offer chapters. If you don't mind, what company are you using? I would be happy to take a look at their website.
I would stay away from the USB thumb drive in AVI format. Macs don't play well with AVI files.
It would be quite an undertaking to re-author the DVDs yourself and add chapters. It requires a couple of pieces of software, and is best done if you have some familiarity.
C