Thanks the-osiris! I am giving Handbrake 0.9.4 a try. Busy re-encoding the mkv now. Looks like it will take ages on my old PC!
3. What do you recommend I use in future to rip with so as to avoid this problem?
see point 1 Smiley
Are you referring to using Handbrake to rip direct from the original DVD (is it a ripper or re-encoder?) or should I use one of the programs from DVD rippers under the link you refer to first and then use Handbrake to re-encode?
If so, which ripper do you recommend as I have already tried DVD Shrink which is what got me here in the first place! (I just read jer1956's post see below)
jer1956 - Thanks for checking this out and reporting it! I wouldn't know where to start! I am glad you got the same issue as me. At least I know that it is not just me being a silly rookie!

Incidentally, my mkv's will not reverse at all (the movie just freezes until I press play again), but the original iso was also perfect. It therefore is most probably not my original ripping method, but MakeMKV that is the problem. Am I correct in my thinking?
With the MKV it appears to display the first frame of every GOP. So you see a sequence of images that change every 3 or 4 seconds
I just had a look at some of the other files I have on my Mede8er and I have the exact same problem you described with all other formats I tried! Various files: flv, mpeg & mpg all would only rewind the way you described. So I don't think this is limited to MakeMKV!
I am so confused now!

Is this really a problem with all the encoders and rippers or is it just the Med8er that is giving the problems?

It seems that ISO is the only format I have that actually rewinds files or movies correctly on the Mede8er!
Thanks again guys for all the help in troubleshooting my problems! I hope we can get to the bottom of this soon! This is really frustrating as I want to get on with it and use my Mede8er as it should be used (a lot!!)