HD h264 files will not playback correctly as mp4 but will work fine as an mkv

[SWKerr]

I have been working on how best to get my Blu-Ray movies to playback thru SageTV. I can create an m2ts file of just the main movie by running it thru TsMuxerGUI and these will generally play back just fine but I end up with a 20GB file and those eat up space rather quickly. I decided to try to compress them to AVC files in an MP4 container. (Mainly because these will play back on my Xbox360 as well) I used MeGUI to compress the M2st file to a reasonable size and create the MP4. There is a Xbox360 profile in MeGUI that I use to make these files.

Now to my actual problem:

The m2st files are full resolution Blu-Ray and play fine but the output at the native resolution will not play on my HTPC as a MP4 without skipping all over the place. (They play fine in the Xbox360) Since my HTPCs only run at 720P anyway I decided to reduce the resolution to 1280x720. (Usually ends up at 1280x528 once they are cropped) I try to keep the MP4 to below 4GB because that is the file size limit for the Xbox360. I usually end up with an average bitrate of around 4000kbit/s. These files play perfectly on the Xbox360 but about 20-30 minutes into the movie in SageTV they start skipping and then restart somewhere near the beginning of the movie. I can’t seem to skip to the end either. The same file plays fine in Nero on the same PC. Most non-HD MP4 files playback fine.

For some reason I tried to put the same videos in a MKV container and they play back perfectly. (Still skips a full resolution) It is the same h264 video output from the Mp4 but in an MKV container with ac3 audio.

I would rather just have Mp4 files since the Xbox will not recognize the MKV.

Is this a bug or does Sage use a different video codec to render the MKV and MP4 files. Any ideas would be appreciated.

[Taddeusz]

What audio is being used in the mp4 container?

[SWKerr]

Audio is AAC down mixed to Stereo for compatibility with the Xbox360. The MKV is AC3.