From here you can simply use an AVI muxer (virtualdub has the option if you use the use source options) but there are any number of simple AVI mux tools http://www.alexander-noe.com/video/amg/
Bonus is this way is far quicker and there will no quality loss as you are not encoding anything.
Bonus 2- even if your MKV houses H264 or you otherwise need to edit something properly (remember you can slice things off videos aka trim them without too much hassle) rather than hope your video editor/encoder has MKV read abilities (MKV is not the simplest/most desirable format to support as an input method) you can pick and choose what to extract and if your editor does not support raw files of various formats in one way or another I strongly suggest you pick another editor as chances are the one you are trying to use is a piece of junk.
I like Xvid4PSP. I know it says PSP in the title, however it is good for 360, PS3, and others. It recognizes all video files I have thrown at it and the only containers it does not output to is WMV.
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