Thanks for the advice on the file types. I'll try that out.
Back to my original problem though...
After playing some more to try and find the pattern, I've found out the following:
I am testing only mp4's that I have encoded myself. All ripped subtitles have been idx/sub pairs containing both english and japanese subtitles in the same files.
I am using the cccp 2007/07 pack, which uses hali splitter and ffdshow to playback the files. After reading about the reliability of the different versions of the vsfilter, I played with uninstalling cccp, and reinstalling and copying various versions of the vsfilter.dll file over the most recent one (i heard that 2.33 and 2.34 were the last good ones). It didnt make any difference though.
The subtitles only ever show on screen if the subtitles section of the "ffdshow options" is ticked. And then, they only show the default stream (in files with more than one language in the subtitle files). Changing the subtitle language in the options makes no difference.
The defualt language for lots of my japanese dvds varies between english and japanese, making for very inconsistent playback, and not being able to change the language at all for multi language subtitle files renders MC useless for playback, for me.
Also, I noticed that sometimes subtitles dont show at all. This is often when a dvd is played back from a bookmarked state. Resetting the file (stop stop) and playing it again, brings back the subtitles.
For now, my solution to the problem is to play the files in zoomplayer. In zoomplayer you dont need to have the subtitle options turned on in ffdshow. You can select which language "stream" you want to play in a menu, directly in the player while the movie is playing. If anybody can enlighten me on how to playback/setup multi-stream (language) subtitle files in MC though, I'd jump back in a second.