On your hard drive somewhere is a file called DVDWS.ini

On my system it was in C:\Documents and Settings\All Users\Application Data\Ulead Systems\Ulead DVD Workshop\1.0

In this file is a line with the string

  PlayAC3=0 

just change this to:  

  PlayAC3=1

and save it. While you're at it, you can also add a line immediately under that one reading

  ADVANCE=1

This is not related to AC3 encoding or playback, but gives you an option to configure a lot of parameters
duing MPEG2 encoding with an "advanced" button. (though it takes a lot of knowlege to use, and most of the 
options are not very useful even if you know what they do.)

Having changed PlayAC3 to "1" now you should be able to play projects with AC3 audio.

That's assuming you have a MPEG2 file with AC3 audio already, under no circumstances will DVDWS actually encode
DV input or a WAV file to AC3 audio. You have to manually create the AC3 and then multiplex it yourself, using several other programs.

You can convert WAV to AC3 with a program set like AC3ENC and BeSweet.
There is also a standalone AC3 player called Azid for testing the AC3 format file once you've created it. 
All these programs can be downloaded from www.doom9.org look under "Download".

Once you have an AC3, you can multiplex it with a MPEG2 file using TMPGEnc, a demo version is available
from www.tmpgenc.net.