AVIAddXSubs is a free program that will allow you to merge your .srt subtitle files with your .avi movie files permanently. You can download the program here. Once you've downloaded it, follow these instructions to add your subtitle file to your movie file:
Create a shortcut for AVIAddXSubs on your desktop.
Create a folder for your movie. Place the .avi and .srt files in the directory and give them the same name. For example, movie.avi and movie.srt.
Drag and drop the folder with the .avi and .srt files onto the AVIAddXSubs icon on your desktop.
At Configuration/SUB1, edit the character set and language to your language. (Use ANSI for English, Spanish, Italian, or German).
At Configuration 1\SUB 1 select XSUB.
Click Start.
Your movie and subtitle files will now be merged.