Same goes for these video codecs/containers - neither h.264 nor Matroska are supported on the ZVM. However, the AVI/MPEG1/2/4 support of the ZVM is pretty nice, since you don't need to resize/transcode most of your videos.
And yes, you download ALL2LAME, LAME, and FLAC. You unzip the archives and put lame.exe and flac.exe in the same folder as ALL2LAME. You open ALL2LAME and enter "-v2" (without the quotes) in the "Switches" bar. Then you can just drag'n'drop FLAC files or folders onto ALL2LAME and press encode. Easy as pie.