If you are unable to open an MP4 file on our media player, try changing the video format. There are many good video converters available on the internet that can help you convert your MP4 to MP3, AVI, ...
You don't even need to convert it to AVI. Just use something like avisynth or virtualdubmod to load the vob file, and then use the WMV9 encoder. Basically the process is exactly the same as using Xvid ...
I'd love to find an app that actually works for this as well. Nero Digital and WinAVI Video Converter both end up losing audio sync rather quickly in the stream when converting from XviD to MPEG2.