I've been working on a number of projects that I want to post about, but one that's been a little frustrating was getting certain MKV files to play on an Xbox 360 using the Windows 7 Media Extender.
I was helping a friend setup his network so he could stream movies from his computer to his 360 and we found that only certain movies would play. MKV files would not play. Research showed that this was due to the type of audio the files were using. Even though the video would play on the computer in Media Player (with the appropriate codecs installed), it would not play on the 360. The 360 would not play DTS (Direct Theater Systems) audio tracks but would play AC3.
Searching various keywords returned a lot of results stating DTS won't play on 360 and a bunch of tutorials on how to convert the video files to a supported format. Unfortunately none of these results were helpful. Maybe it was dumb luck or initial my poor choice of keywords but we finally came to a post on carbonize.co.uk that was also a walkthrough on converting your files. The steps were fewer and only required one application. We gave it a shot on some files and it worked great.
Here are the steps from carbonize explaining what to do in XMedia Recode (get the Portable version). The only thing we did differently was step 5. We did not select Copy, but convert with the defaults. Worked like a champ! Thanks carbonize!!