Exactly.
In case of MKV files:
If tsMuxer is the first one, video is listed outside #transcode# directory. tsMuxer only remux video and audio so it means low CPU load, lower bandwidth, max possible quality(no video recompression). but no subtitle support.
If this video will not play or you need subtiltes, then go to #transcode# folder where MEncoder is used(or others depending on your priority options/enable or disable status of them) and choose one from listed. There you will find all possible combination of audios and subtitles. But in this case, video is re-encoded, so that it means higher CPU load/requirements, up to 10x-15x greater bandwidth but 99% compatibility that file will be played on PS3.
In case of AVI,m2ts,mpeg etc., these containers are always streamed without any change to audio/video track. So if it will not play for you, the #transcode# folder is for you, same way as with MKV files.
CONCLUSION: If you don't need subtitles and want max possible quality, try file listed outside TRANSCODE folder. If audio/video/subtitles will not play or data corrupted, use TRANSCODE folder.
Hope it helped
