I simply have CxD create the DVD in a folder. I later burn onto a DVD. I first watch on my monitor. Trust me, this is a conversion problem inside CxD. I have performed multiple conversions on the same file and it never pixelates at the same spot and sometimes it goes all the way perfectly.

VSO should take some 3 minute SAMPLE clips (off the Internet) of MKV/H.264 and convert with different loads on the machine. Try heavy downloading, or running another cpu intensive job, whilst converting MKV. Also try no load other than CxD.

NOTE: I have no MKV Codec or splitter on my PC. THe only MKV decoding is 100% from CxD.