Wikipedia seems to imply that Turbolinux bundles proprietary codecs.
More generally, under what conditions is it OK to mix proprietary and GNU-GPLv3 software into an operating system, and distribute it on a DVD?
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It is OK, as long as no derivate software (or other product) derives from both. Distributing them together is another matter, and to be precise in the Open Source Definition it is clearly stated, that open source licenses cannot restrict bundling:
1. Free Redistribution
The license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources. The license shall not require a royalty or other fee for such sale.
Some frown upon such distributions although it is conforming to the licenses involved. It doesn't only is true for TurboLinux, nearly every Linux-distribution has unfree parts. The FSF lists completely free Linux distributions.
Merely aggregating different works on the same media is not an action that is covered by copyright. There is no copyright for the aggregation. Copyright only comes into play if the works are meshed together in a way that displays some originality — this is known as a derivative work. Bundling software on a single CD does not display any originality and is thus not subject to copyright: only the copyright and license of the individual pieces of software apply.
Inasmuch as a distribution selects which software is included on the CD, the selection and arrangement may be covered by database right. Database right is somewhat similar to copyright in that it restricts what others can do with the database. Database right is defined by the Berne convention, but is implemented differently in different distributions, e.g. in the US there is no such legal category (the provisions of the Berne convention are spread around other bodies of law) while in France database right is part of copyright but with many differences. In any case, database right applies only to the collection as a whole, individual copyright and licenses of aggregated components still apply.
Restricting software from being bundled with other software is generally considered to be an unacceptable restriction on its use and distribution. For example, the Open Source Definition explicitly states that “the license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources”. The GNU GPL explicitly states that “inclusion of a covered work in an aggregate does not cause this License to apply to the other parts of the aggregate.”
Running a mixture of software with different licenses on the same system is not covered by copyright, again because it is mere aggregation. Linking software with different licenses (i.e. running a program that uses various code libraries, or loading a plug-in) is not clear-cut. Linking itself is a mechanical process, not a creative one. However the process is more than mere aggregation. Opinions vary on the legal status; for example, the GNU GPL explicitly includes “shared libraries and dynamically linked subprograms that the work is specifically designed to require, such as by intimate data communication or control flow between those subprograms and other parts of the work” in the requirement to provide source code, thus forbidding to link GPL-covered code with code whose source is not available under the GPL. Only “system libraries” are excluded from this requirement. Not all free software practitioners agree with this interpretation; for example, Linus Torvalds, main author of the Linux kernel, has explicitly stated that he allows closed-source drivers to be linked into the GPL-licensed Linux kernel.