I record movies on TV, demux them (and cut out the commercials) through ProjectX - retaining the subtitles (utf-8), and then create mkv files through mkvmerge gui (most of the time). The problem comes when the audio is a 192 kbps file - the playback device I use makes the audio unpleasant - the sound kind of pulses instead of playing smoothly. I always select no compression on each track, but the end file always comes out smaller than the sum on the sizes of the original combined tracks. I do not know if the compression (?) is part of the problem or not, but I don't seem to be able to do anything to effect it.
It may be worth noting that if I take the exact same audio and video file and put them in a mpg (2) container, I can play it on the same playback device and everything sounds fine.
I think I would be happy to use Handbrake (if that's better). The audio seems to come out fine, however, the subtitles always come at as ASS, which my player doesn't seem to understand. I import the srt files into Handbrake, but I can't figure out a way to make them retain that format.
I'm sure there is much in this post that conveys my ignorance about video, but if anyone is willing to help, I'd greatly appreciate it.