Use
eac3to - audio conversion tool to make an mkv file.
MTS file to MKV file, video part like this.
eac3to feature_1.mts(+feature_2.mts) movie.mkv -stripPulldown
Load the mkv file with
ASF Multiplexer 1.0 demo, select an output file (ex. movie.wmv) and start muxing.
No compression excellent quality.
Now you have a wmv video file.
Create audio (wma) by muxing the preferred audio ripped with eac3to into the mkv file( or a separate mka/mkv file with just the audiofile, much faster if you can get it to work). Load it in Windows Media Encoder, make your own 5.1 audio profile with desired bitrate. Choose audio encode only, no video.
(tip: install AC3Filter and set it to 5.1 output sound if you haven't got it installed already)
Now you have a wmv file and a wma file. Mux it with Windows media stream editor. Voila!
This works for me, with excellent quality, streams perfectly to my xbox 360.