As for the need for those extra two command line options, perhaps, you're using a different version of MEncoder than I do. I'm using version "dev-CVS-050928-16:38-3.4.2" (the 1.0 pre8 release).
I do rip DVD's myself but I always use the XviD codec. I have no idea about where an official, usable H.264 codec exists for Windows, if at all. (Do you know a definitive download location for such a codec?!) If there's no such package, it shouldn't be a surprise that you can't play H.264 video in
any media player, only ones that explicitly support it, with some custom DLL of their own...
Don't mind the junk data; yes, MPlayer adds that to the unused parts of the header, but that's just garbage, it's not there instead of anything useful!