get mkv extract gui,(
http://corecodec.org/projects/mkvextractgui/ ) to extract the files needed from the mkv file,
then get the standard virtualdub (
http://www.virtualdub.org ) and vfw codecs (
http://www.free-codecs.com/download/ffvfw.htm ) & the subtitler filter (
http://www.virtualdub.org/virtualdub_filters ) to add the subtitles.
if extracted audio file is in mp3/aac/ogg format, get dbpoweramp (
http://www.dbpoweramp.com ) and all necessary codecs to convert it to wav
open ur extracted video file in virtualdub
in virtualdub, under video, select filters, subtitler amd get ur subtitle, then select compression and choose the desired codec and bitrate (preferably ffdshow/ffvfw)
and then under audio, select wav as source and look for ur converted wav file, make sure full processing mode is selected. then choose compression ( before tht get this is u like mp3 as ur codec,
http://www.free-codecs.com/download/LAME_ACM_Codec.htm ) and select lame with the desired bitrate.
whn all is set, just save as avi, and wait
this is the safest way i know to convert mkv to avi and it doesn't cause lag in subs or audio, but the subtitler can only do simple subtitles, meaning no fancy karaoke style op/ed and stuff. i did it with my school rumble series and it turned out okay ( winavi can't read mkv so i was forced to do this)