I'm getting the exact same thing. I have a series of lectures that I'm editing to insert overlays from an accompanying PowerPoint presentation, then publishing in a format with the same settings as the original file. My first video, which was about 750 MB, worked without a hitch. My second video, which is slightly over 1 GB, crashes AVS Video Editor at about 97% done. Then I get the 65536 error.
I'm on a time constraint with this project, so it's incredibly frustrating. As it is it's taking between three and four hours to publish this - it's HD video and processor-intensive - but then, after all that time, I get nothing but failure. This has repeated itself three times.
I'm using AVS Video Editor 126.96.36.199 on Windows XP SP3.