Firstly, I have already ripped most of them to Video_TS folders as ifo and vob files. I would prefer to have them as mkv files so that I can use madVR. So the first question is about ripping or converting to mkv. Do I create a single mkv file for each episode or is it better to create a single mkv for each disc and then use something like Particles to break out the episodes?
Use a single file per episode, everything else is going to be a pain.
Whichever ripping method I choose, I assume I am going to lose the original menus. So how do I now organise the files in the library to be able to navigate? I know there are fields for Season and Series but I don't know what to put in them and I don't know how they are used to navigate.
The numbers are pretty straight forward. Season is of course just the Season, and Episode the Episode. I don't know how you can go wrong there.
The "official" numbering/order of the episodes has to be used, of course. You can always check
http://thetvdb.com/ for which episode has which number, but generally its just 1 to N for every season.
If you name the files like "Show.S01E01.mkv", then MC17 will be able to automatically fill Season and Episode, and gather all sorts of metadata from TVDB.
Once you have this setup, you can create a View in TheaterView that will show a list of your shows. Once you click on the show, it shows a list of Seasons, and once you click on the Season, you get a list of the Episodes in that Season. Perfect TV Show browsing experience, imho.