You can use mkvtoolnix with MKVExtractGUI to extract the audio and video.
THen, mux them into an MP4 container as it’s supported by the xbox 360.
To mux into MP4, use these:
YAMB (GUI for the below tool)
MP4Box 0.4.5 
Hi all
Just found this forum as I am struggling with something hopefully you guys can help, i searched the forum but couldnt find what i need to know...
Ok, so i just got a new HD TV and I want to watch HD video files on, heres my problem..
>My laptop is 3 years old and doesnt have a HDMI/DVI output
>I am putting avi video files onto a usb stick which i am then putting into my xbox (the only thing i can hook up to the tv via hdmi) to watch
>I have some HD video files in .mkv format but xbox obviously wont support this format.
I found some guides that advised to convert the .mkv files to avi which the xbox supports, but surely this will detract from the quality and negate the whole point?
Is there solution you know of where i could view the HD video files (apart from dishing out on a new laptop)?
If you guys can give any advice I will be eternally grateful
cheers