After many attempts over the last couple of years these are my settings to achieve the best standard def DVD quality for an HDTV and for the iPad 2.
1st - Click on the Regular 'High Profile' preset. You'll change some of the settings, but this is a good starting point. Now for the step by step setting adjustments.
I Always make the extension MP4. I don't use mkv.
PICTURE: Source=720x480. Anamorphic=Strict (this keeps the original screen shape, letter box, 16:9, 3:4). Cropping=Automatic.
VIDEO FILTERS: Detelicine=Default. Decomb=Default. Delinterlace=Off. Denoise=Off. Deblock=all the way to the left (On).
VIDEO: Video Codec=H.264 (x264). Framerate (FPS)=Same as source. Variable Framerate-Constant Quality=RF:20.
AUDIO: To get the best sound output you will need to 'Add Track' 2 sound tracks. In this order add...
Source=1English (AC3)(5.1 ch), Audio Codec=AC3 Passthru, Mixdown=Automatic, Samplerate=Auto, Bitrate=Auto, DRC=0, Gain(db)=0. This track is for your HDTV to get 5.1 surround sound.
Then add Source=1English (AC3)(5.1 ch), Audio Codec=AAC (faac), Mixdown=Stereo, Samplerate=Auto, Bitrate=160, DRC=2.5, Gain(db)=0. This track is for your iPad 2. This has to be added or else the movie cannot be loaded onto your iPad 2. I add this last, so it is the top sound output listed.
SUBTITLES: This setting will vary from DVD to DVD. Usually English or foreign bitmap are the subtitles you want to Add. Is the movie a foreign movie with subtitles throughout? Then you would need to 'Add' the 1.English subtitle. If there are subtitles that only appear during a foreign language part then it usually is 2.English Subtitle. The Forced only, Burned In and Default check boxes are suppose to help figure all this out, but I've experienced variation from DVD to DVD. Forced sometimes works, burned in sometimes works. You may have to play around with these settings. Also the source of the subtitles from the original DVD can be difficult to identify. When you first load the source, you probably will need to Load the video FOLDER, not FILE to get the subtitles to work. Besides trial and error try reading up on subtitle forums for a better explanation. Be sure to remove all subtitles if you don't want any.
CHAPTERS: I never include chapter marks, it leaves a little white 'chapter x' in the bottom center of the movie.
ADVANCED: Don't change anything here unless you know what you are doing. All the setting work as is; this is why I clicked on the High Profile preset. To get this tab in particular to be preset for me.
I don't check any of the 3 boxes on the top. Large file size, web optimized, iPod 5g support. I've only had to check Large file size on home movies that are over 2gb.
Save these settings as a new Preset. Click on the +Add. Name this new preset. Choose 'Source Maximum' in the drop down tab. Check 'Save Filter Settings'. You can make this new preset your default preset if you'd like.
File sizes for me are usually between 1gb - 1.5 gb. The largest movies I've converted ended up being 2gb. This is much smaller than the typical 4.7 gb DVD so you can convert many movies and fit hundreds of them on a 500gb - 1tb hard drive.
Good Luck
