Most of the people was misunderstanding about video format, when your media player (eg. Windows Media Player, Real Player etc.) not able to play particular video format file, it's not the player problem, it's due to related video codec not been installed. The same thing happens when converting file from one format to another, as long as you have related codec installed, you will be able to convert the video to the format you want. Here's one of my recommended codec pack:

Download Combined Community Codec Pack

Download and install this codec pack, you'll be able to play MKV (Matroska Media File) / VOB (DVD Video Object) / FLV (Flash Video, eg. video ripped from YouTube will be in this format) file in most of the media player, also allow you to convert MKV / VOB / FLV file to other format (eg. MP4 for your iPod) with your existing converter. This codec pack also come together with Media Player Classic, which is one of the most powerful media player that able to play almost any type of media file (of course, with the codec pack been installed together).

Hope my explanation can help to clear the doubt about MKV / VOB / FLV file. Please leave your comment if you have any question, thanks.