According to the WDTV Mini user manual, mkv is supported. However mkv is simply a container and therefore the mini may not support the codecs contained within the mkv. You could use mediainfo (freeware) to show the contents of your mkv and post back.
For info this board is for WDTV Live users only. If you need more help with problems you should post on link below.
(I do note from this forum that people do seem to have problems with playing mkv material so perhaps the user manual is incorrect or maybe users have the wrong mp4 codec within the mkv file)
The mkv format is not dedicated to HD content and you can use a variety of SD material within the container.