Install Virtualdub.
Install VobSub
Open Virtualdub. Load video file. Go to video->compresion and select the same codec and bitrare like the file you loaded (can be seen in file->file information).
Go to audio and be sure "direct stream copy" is selected.
Go to video->filtes and load textsub. Configure it (what is the subtitle file, fonts, position). Go to file->save as avi.
You have an .avi file with permanent subtitle.
You may also use .mkv or .ogm containers to save subtitles inside the containes. Just use VirtualdubMod, and when going to Save as, select .ogm or mkv format.
There is also embedded avi files but in this field I have no expertise.
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