Well, the on-the-fly copy should work just fine. If you want to burn the image created by DVD-Decrypter, just use DVD-Decrypter. It can burn the ISO's it creates. Or, instead of ripping the DVD as an ISO, do a file mode rip then tell Nero to create a DVD-Video disc (using the normal Nero Burning ROM, not Express or Nero Vision). Drop the files from the dvd rip into the VIDEO_TS folder that Nero puts there for you, and it should work fine.
As to why it wants to create an image, start Nero and make sure your burner is selected, not the "Image Recorder". That's the only reason I can think that Nero would want to do an image, other than the disc being oversized.
And DVD Shrink works just fine on single-layer discs, too, if you don't want to have several DVD rip programs. But then, DVD Decrypter is nice since it can do ISOs...
If Nero still refuses to copy the image, and it's the right size, see if another burning program can do it. Try CopyToDVD
); it has a free trial version available.