People need to understand that H.264 is still under heavy development even x264 doesn't support the full set of features that h264 has to offer. It probably comes closest to it though, but to say xbox 360 will support x264 you could definitely say no since Xbox 360 will only offer limited h264 support. And most people that use x264 will make benefit of options that the xbox 360 will likely not support. However you could make Xbox 360 compatible encodes with x264!
And actually you could convert DTS to AAC 5.1 in a mpeg4 container but the specs say this isn't supported. Don't even try guessing that DTS will ever be supported by Xbox 360, it's licensed and even on PC there's only a few tools that actually do support DTS decoding.
As for MKV, MKV has nothing to do with mpeg4 at all, it's just some open source container which has minimal support outside the world of PC users. So don't count on any implentation of that.
Ideally an Mpeg4 encode would have MP4 container + AAC sound + AVC(h264) video
Provided that you would use LC AAC sound and main profile AVC video encoding options this file should play back on your Xbox 360!
This post has been edited by billybobz0r: Apr 11 2007, 09:21 AM