I use this program to convert my MKV files. It's 100% free,supports a tone of formats,and even has a simple video editor. it's not the most complex program out there and you have to play around to find all the right settings but it does the job,takes every file I throw at it and did I mention that it is completely free?!
It really is a god sent to people like me who have no cash but want to work with HD video.