Hello,
I'm having the same issue when trying to convert an MKV (ripped from Bluray) to AVI or MP4. If I play back the MKV with VLC, I can see the forced subtitles track (as well as many other full subtitles tracks). But when I pull it up the file in AVS converter, there are no "subpictures" at all listed. These subtitles tracks are, of course, internal to the MKV container, not external files.