I have been playing with this for couple of days and finally found solution which others might find helpful...that is if you wish to include an additional hard coded subtitle track in a movie.
I have a movie AVI file with French audio and hard coded Dutch subtitles and I wanted to have English subs (else I do not know what is happening in the movie...). Problem with hard subs in AVI file is they cannot be removed without cropping the video. I was not concerned about changing the AVI format to something else like MKV so I downloaded an English srt file but when I tried to add the srt file and converted the file the English subtitles appeared over the top of the Dutch ones. The same applies if you try to play the AVI movie using the SRT file separately.
The English ones needed to be moved to the top of the screen but SRT subtitles cannot be moved except when playing the movie and using something like VLC and its option to do so. However I want to put the completed movie in my XBMC library and play it from there on a TV or whatever and not use VLC. I was not concerned either that the movie would have two sets of subtitles on the screen as long as they were separated.
Solution was as follows:
One way to move subtitles is by using a subtitle file format of SSA so I converted the SRT file to SSA format using Subtitle Editor.
Next I used a text editor to alter the SSA Style Alignment to specify top of screen.
Lastly I used Avidemux to copy the AVI file as MPEG-4 ASP (Xvid) plus the video filter for Subtitles specifying the SSA file with a resulting MKV file with English subtitles at the top and the (existing) Dutch subtitles at the bottom.
I use Linux for most of my media stuff but one could follow above solution with similar apps on Windows etc.
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