Converting MKV with subtitles to Divx with subtitles, plus H.264 encoded mov and avi files

I'm having a problem converting H.264 encoded mov and avi files period with the regular divx converter and with Dr. Divx (Dr.divx converts the files but then says failed afterwards but the file plays ok). Right now this is not my main issue because I've been using other software to convert the H.264 encoded files into regular avi's so I can use the Divx converter. My main problem now is with MKV and subtitles. I cant even convert MKV files with the regular divx converter. I can make them with converter, I can play them in the nice new player but I can't convert them into regular Divx files. With other programs I can convert MKV's to Avi but I run into my problem. No SUBTITLES. As anyone knows MKV subs are not like Avi subs or any other format. The subs are contained within the MKV file, there isn't a separate sub file. So I want to take my MKV file with subs and turn it into a divx file with subs. Please help.

Oh yeah my Cpu specs:
Windows XP Pro 32 bit
Amd Athlon 64 Dual Core 5000+
Gigabyte motherboard(root of all my PC problems)
model: GA-M57SLI-S4
with that built realtek sound crap
2 gigs of ram
all codecs installed
You name I got it.