Tool's your going to need for encoding video's:

1) MeGUI
2) AviSynth
3) x264 Profile (Profiles for MeGUI)
4) Nero digital audio codec
5) MkvMerge GUI

1) Download and install MeGUI

Available for users only

Also download Avisynth

Available for users only

Let it update! - Update is an MUST! (MeGUI)

2) Opening and Creating Avisynth

Before you start Encoding your movies,copy x264Profiles to your MeGUI directory C:\Program Files\megui\allprofiles

Ok,now your ready to start.
Open MeGUI,in left upper corner you will see "File" option,go to it,and open your Video file with it.
Ps. Dont bother to Encode low quality movies / shows
Ok,you have opened your video,you will see two screens.
1st one is Video preview,second one is Avisynth Scrypt Creator.
Setup Avisynth SC. like this :
just untick/unselect the Resize, cause if you temper with the resolution it doesn't turns out quite well, so original resolution is fine without resizing.
Only HD and DVDR need to be resized and cropped!

3) x264 Profile

Available for users only

Just unpack them in the megui directory and overwrite yours and when you run the program all profiles should appear!

4) Audio:

Audio source (input) is the same as movie source file! Open it, then find the source video file. (example: if you have opened troy.avi then created avisynth script troy.avs, after that you click on Audio input "troy.avi file IS Audio input/source!)
Select it and open, select codec to be NDAAC (Nero Digital Audio Codec) Use profile NDAAC-HE-64kbs, then select Adaptive bitrate and set from 45-50kbs (thats enough for decent audio quality and extremely high compression!) or you can use LAME MP3, go to config, there is not much things you can do here just change the bitrate from 128 to 80 (below that, the sound isnt very good) click OK.
NDAAC (Nero Digital Audio) is one of the best codecs, probably even better than LAME cause it can do high audio compression while preserving decent audio quality at small bitrates.
If you don't have installed nero digital audio codec download it here:

Available for users only

Then copy all the files (neroAacDec.exe, neroAacEnc.exe, neroAacEnc_SSE.exe, neroAacTag.exe) from extracted directory (win32) to C:/Program Files/MeGUI/. Do not copy the entire directory, only files.

5.Final Step

In the lower right corner you have "Autoencode" tab. Click on it.

Select a Container to be MKV (if it isn't already). This is where you decide the entire outcome/bitrate of the movie. Click "average bitrate" option and type the desired bitrate (example 500kbs total, 450kbs goes to video 50kbs to audio, of course if audio is set to 50kbs if it is set to higher bitrates then it will lower video bitrate), that is depending on movie duration your size and bitrate will vary. Aim to get the size 1MB BELOW the targeted size, if its 300MB rip, aim to 299MB, if its 400MB rip, aim to 399MB (this is because of compressing with winrar so you dont get fourth rar file on 300MB rips that is like 1-2MB's)

6. Encoding

In autoencode window click Queue. In upper left corner you have the tabs Input/Queue/Log. Click on Queue. Click Start. If no workers exist program will offer to create one!

100MB is 30min of the movie / tv show, 200MB is 60min of the movie / tv show, and so on, you get the point.

Now you will see 2 seperate Files in your Save Directory.
One is video .mkv and second one is audio. (mp4)

Now open MkvMerge GUI

You can DL it here :
Available for users only

Just add your .mkv video file and it will add its Audio file too,click on Muxing and thats it !
Your .mkv Video is encoded and ready to play