Converting Files - Which Options For Whs?

I have WHS 2011 installed on my HP Micro Server 40L. I have been transfering all my data from various drives and computers onto the server, and now I have a bit of a problem.

I have a lot of HD movie rips in MKV format, which play fine on when opening them by browsing the shared folders, but these do not stream via the web interface.

I downloaded Avidemux 2.5 after a friend recommended it, but I am a bit lost as to which options to select. I want the films to remain in HD quality, but I would like to convert them to AVI files so the can be steamed via the web interface.

In the program I have video and audio options. Video options presents me a list of formats (various mpegs, H.263, DV etc), each one with its own set of configurations. Audio gives me a list of formats (mp3, AAC etc) and options for those as well. Below this is a format option, so I have selected AVI from the list, and there are some muxing options and a 'split every MB' options, which has a default value of 4096.

I need to know if anyone has used this software before and what options to use. or a simplier option to convert my MKV files into AVI.