Confirmed, I have exactly the same problem. According to this
http://www2.exit1.org/archive/dvdrip-users/2007-07/msg00002.html the
problem is a variable which is not populated correctly when dealing with
hard-disk dumps or loopback mounted images instead of real DVD's
** Changed in: dvdrip (Ubuntu)
Status: New => Confirmed
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Cannot extract vobsub file from ifo files in local folder, only from DVD
https://bugs.launchpad.net/bugs/242604
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