So if I understand correctly, you got a file movie.divx instead of movie.avi?
You can watch it on your computer the same way you watch an AVI file.
If you want to convert it to DVD, in your converter program, Xilisoft:~),if you can't see it, just select "All file types" from the drop-down menu, or, like suggested, rename it to AVI(the divx container is similar to AVI, just more options(can hold multiple audio, subtitles, create menus, ...))
Depends on the converters, some handle MKV better than others) and depends on what's inside the MKV conatiner). I would convert and save to HDD, preview the new authored DVD, and if all okay, then burn it to disc.
If is not supported by the converter, you can use AvimuxGui to change the container from MKV to AVI(no re-encoding would be done, so no quality loss).
As for the little knowledge that I have, all obtained by lurking here on AD.:~)
