the power dvd encoder on matroska pack or k-lite pack is free.
for the best viewing use a hardware decoder. if you have an nvidia video card, use nvidia pure video decoder, if you have an ati video card use vivo as they will use the hardware instead of software to decode
or buy a dvd decoder card like real magic on ebay, because they cost 300-400 but sells for 15-25 bucks on ebay.