sabelv - you have to understand that DVDs are not DVDs.
That is, the disc you stick into your DVD player with a commercially purchased DVD has MPEG2 data which has been compressed to 720x480i video which is Redbook standardized for playback in 100% of all DVD players in the USA (or your specific region of the world). The fact it MAY play back CDs, or VCDs, DVD-A, or SACD is just an extra, but to play back a DVD itself the disc must be formatted with proper DVD
VIDEO structure on the disc itself.
The MKV file format isn't lossless. It is just something which holds video in it. I can't be to specific about MKV itself, but let's put it this way - if there way an old VHS tape copy of a movie in lousy quality - and it was coverted to low-resolution video... that video could then be put into a .MKV file. It would still be a lousy cruddy video.
Now, if you start with a HD video, and it is in .MKV format, you won't have any luck with a true DVD conversion, because DVD is limited to 720x480 resolution and the .MKV file will have to be down converted to that resolution for proper Redbook DVD standard playback.
I'm personally going to do some things this year (money permitting) to play with media servers including a product called Popcorn Hour and one called Dune Base 3.0 which are media playback devices. These will connect over my home network to videos I will have stored on my computer and they will play the videos back without issue. No DVD required. Straight from my PC, over my network to the media player, to my TV (and receiver).