What is the best way to do this without havuing to purchase any software or freeware that leaves watermarks??
Well ogm you can always remux the video, so that would be the best way. mkv can have video streams that aren't avi compatible, so you may have to re-encode. Plenty of freeware apps and I doubt any would leae watermarks, that is more a sign of trialware. Most free apps are I think mencoder based. So you could just use that directly. Then there is also ogmdemuxer and mkvextract which are both free tools for extracting streams.