I tinkered around for about 3 hours and still cant get it to work! I followed the following steps:
step 1. Download and install the CCCP (Combined Community Codec Pack): http://cccp-project.net/download.php?type=cccp. During the installation process install everything except for both media players. Just take Media Player Classic (even though which media player you chose, one or both, doesn't affect this at all). This is the best and most comprehensive codec pack available. Use it because I know it works.
Note: I only saw one player and unchecked it.
Step 2. In the CCCP settings screen that appears after the installation, click Next on the first screen. On the second screen, uncheck everything under 'Haali Media Splitter'. Also make sure nothing under VSFilter is checked. This will prevent Haali Media Splitter from loading, which causes a problem for TVersity to sometimes display the 'Unsupported File Type' error.
Note: I didnt see anything under "Haali Media Spliter" or VSFilter although from my other tries i did uncheck them...
Step 3. Navigate to Start > Programs > Combined Community Codec Pack > Filters > VSFilter. On the 'General' tab, under 'Loading', chose 'Do Not Load'. Press OK and close the window. This ensures VSFilter never loads, although if you use the same computer for playback when not on your PS3, you can change this back to 'Load when needed' later.
Note: did that
Step 4. Navigate to Start > Programs > Combined Community Codec Pack > Filters > FFDShow Video Decoder Configuration. Scroll down to 'Subtitles' and check the box beside it. In the window on the right (with 'Subtitles' selected), check 'Accept embedded subtitles', 'Accept SSA, ASS, and ASS2 subtitles (experimental)', and 'Decode closed captions'. Also uncheck 'Letterbox'. Press OK and close the window. This ensures that if you do have a video with subtitles, embedded or not, they will be shown. If the video doesn't have subtitles, you'll see nothing. This also ensures if your video is widescreen, it will fill the screen properly. If it is not, it will appear normally with bars on either side if it's 4:3 aspect ratio.
Step 5. On Vista, disable UAC, restart, install TVersity and re-enable UAC, and restart once more. Or install it whichever way you usually do. This is the way I do it and one that I know works every time with a single problem. DO NOT INSTALL THE TVERSITY CODEC PACK.
I have Window 7 64bit. Tversity automatically installs a codec pack and I have tried with/without uninstalling the codec pack
Step 6. Open TVersity and make sure the following settings are in effect. Under 'General', actually select 'Sony Playstation 3' (or Xbox 360). Under 'Media Library', for 'Media Library Menus' choose Filesystem (personal preference, optional). Under 'Transcoder Settings', choose 'Only when needed', uncheck 'Decrease the bitrate if it is too high for my network', set maximum video and image resolution to 1280 x 720 (both of them), check "Use DirectShow for Windows Media Encoding, and select 'Windows Media Video 9' from the drop down list, for connection speed select optimize for 'Quality', for connection speed select 'Wireless G (54 Mbps) and connection quality to 'High', select 'Decode the media as fast as possible without taking into account its bitrate'.
I tried the "Long on service" for tversity using both local and my computer name (as a matter of fact i tried all the user names...)
So what I have is that I can stream mkvs fine BUT it doesnt have subtitles -the subtitles are embedded by the way. I did read another thread that the windows media player on the PC needs to be able to view the subtitles fine and I have achieved that too but still no luck. Anyone can help? thanks!