SSSD 0 Light Poster

Hey, i want to convert my hd mkv file so it is compatible on my ps3, and i was wondering if there are any free software that can do this as well as make a custom 'dvd menu' of some sort, to which i can add a background and music.
The file is quite large, about 2.7gb, and weirdly, some software i have tried dont accept the file! For example one software claimed i haid an '&' in the file name, or some unusable character, so i changed the name to 's' and it still didn't work!

Can anyone suggest any good free programs that can do the above mentioned?
Thanks in advance

-SSSD

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