Why does audio or video not play anymore (e.g. MP3, AC3, DTS audio tracks, h264 video tracks) or why does Windows Explorer crash when displaying Matroska files with v4.1.0 and newer?
You've used earlier versions which worked just fine. However, all versions since 4.1.0 produce files that pose serious issues when you try to play them back or when you navigate to them in Windows Explorer.
This is a bug in your player or in a Windows Explorer shell extension. It can be fixed by updating that software, uninstalling it or by using certain compatibility options in mkvmerge -- or switching to mkvmerge 6.0.0 or later and remuxing your file.
Note that, starting with v6.0.0, mkvmerge does not use header removal compression anymore. Therefore you do not have to select any compression setting, and the corresponding option in mmg's preferences has been removed.
The Matroska specifications know a feature called "header removal compression". This allows a muxer to keep a certain number of bytes that are identical for each frame in the track headers removing them from the individual frames. This reduces the size of the tracks significantly without altering the content as a demuxer can add the bytes found in the track headers to each frame during demuxing.
Starting with v4.1.0 mkvmerge uses header removal compression for a couple of track types by default. These include AC3, DTS and MP3 audio tracks as well as Dirac video tracks. Other versions add other track types (e.g. h.264/AVC since 4.2.0) to this list. The user muxing a file may disable it by explicitely selecting 'none' as the compression scheme for such a track.
If your player has difficulties playing such files then it is a bug in that player or in the demuxer but not in mkvmerge. This feature has been part of the Matroska specification since more than six years, and there's no excuse for refusing to add support for it.
The proper solution is to ask the vendor of your player to support this feature. A temporary solution is to re-mux such files turning off extra compression for all tracks.
The reason for crashes in Windows Explorer is the DivX thumbnail component which does not support this feature. Uninstalling it will fix the issue. There are reports that DivX Plus 8 seems to have fixed the crashes, but the thumbnails are still completely black.
Here's a list of hardware and software players that do not implement this part of the specification. This list is most likely outdated as updates are released by the authors and manufacturers.
DivX thumbnail component
mplayer and derivatives (e.g. KMPlayer)
SolveigMM DirectShow demuxer
Asus O!Play and O!Play Air
Brite View CinemaTube
Samsung LED TV
Several players have had issues with this feature in the past but have been fixed in the meantime. For hardware devices this usually means that a firmware upgrade is required. Again this list is probably outdated and incomplete.
Media Player Classic (MPC) and Media Player Classic Home Cinema (MPC-HC)
VideoLAN Client (VLC): versions 1.1.2 and newer work correctly