My good ole standby has been AVI2DVD:
http://www.trustfm.net/divx/SoftwareAvi2Dvd.php (free)
A new one that's just popped up is a noname..seems to do decently, but a little buggy..
http://sourceforge.net/projects/alltoavi/
The art itself of MKV to AVI is EXTREMELY complicated, especially when the full allowances of MKV are brought to bare, such as multiple audio and sub tracks. IF the automatic tools don't work, which 15% of the time they don't, you can go the all standard method doing it one step at a time (read as VERY time consuming but gets it done):
http://forum.videohelp.com/topic241422.html
Just remember all these methods are VERY picky about the system you use. Make sure before you even start you support all the codecs you need in the file. MKV is a container shell, it actually houses videos and audio in their native formats. You could have a video as x.264, .avi, .mpg, or .mov or any other video format, along with audio in the .mp3, .wav, .aac, and many others. Having the codecs installed on your system is key. I normally install the full xVid codec, with LAME MP3, AAC, OGM/OGG, Quicktime/Realtime alternatives for my codecs. You can get just about anything you need from
www.free-codecs.com They also have many of those tools, including AVI2DVD and VDubMod.
Good luck.