Hi seaspray07,
oh - that sounds like a bug and I would ask Surcode why their plugin doesn't works right.
I only use the standard plugin that can export Dolby Digital stereo and that is also available in the H.264 Bluray export options. (for 5.1 I use a external encoder application - that would also the way to get DTS Master Audio)
But if you can access it from the MPEG2 menu that also will work. You export so called "unmultiplexed" streams for Bluray authoring. That means export video only H.264 Bluray as .m4v and then export audio only from the MPEG2 Menu and select Surcode .ac3
As a result you will get separate audio .ac3 and video .m4v to directly import in Encore with "dont transcode" setting.
If you do so you can create a Bluray on the fly because Encore only needs to write the Bluray image - no encoding involved at all...