UPDATE FROM ARS:
Looks like one of the developers didn't want to risk IP headaches from his employer, so they removed direct DVD decryption from Handbrake, and you now need to install VLC as well so Handbrake can mooch off the player's libraries.
(Sadly, the governments have totally screwed end-users out of fair, personal use rights in subservience to the big media lobby -- I'm happy to pay for my content, but then I want to be able to watch it -- myself -- how and when I want. Get off our lawns!)