How to make VLC play an iso file directly

Downmixing/Adjust from 5.1 to 'true' 2.1

I use ALSA and Pulse Audio on my Arch Linux machine.

You want to control how downmixing to 2.0 is done, so you're going to define a custom sound device in /etc/asound.conf

You can use this output configuration:

(add the custom function to the file /etc/asound.conf)

pcm.51to20
{
  type route
  slave.pcm surround51
  slave.channels 6

  # Front and rear, at 33% of original signal strength
  ttable.0.0 0.33
  ttable.1.1 0.33
  ttable.2.0 0.33
  ttable.3.1 0.33

  # Center channel routing (routed to front-left and front-right),
  # 6dB gaindrop (gain half of main channels) per channel
  ttable.4.0 0.16
  ttable.4.1 0.16

  # LFE channel routing (routed to front-left and front-right),
  # 6dB gaindrop (gain half of main channels) per channel
  ttable.5.0 0.16
  ttable.5.1 0.16
}

Then in VLC

Go to the audio preferences

Tools -> Preferences -> Audio

Set Outputmodel to Alsa audio output

and

Set Device to Default ALSA Output (currently PulseAudio Sound Server)

Save and restart VLC

ffmpeg supports decoding of the G2M4 format. Why not try encoding your file to another format such as mpeg-4? Maybe:

ffmpeg -i input.wmv -c:v libx264 -crf 23 -c:a ac3 -q:a 100 output.mp4

like explained in this Q&A. I have converted the g2m4.wmv sample file here successfully. Make sure you have a recent version of ffmpeg(2.2.4 in my case). You can always try a precompiled version so you don't need to compile anything nor modify your package sources. Depending on the options chosen for encoding, this may require extra packages such as libavcodec-extra-53. In that respect you should keep track of the default packages available for your version of the distribution. You can see that vlc 2.1.4 is in 14.04 only and that both 13.04 and 13.10 have version 2.0.8.

You should note that Ubuntu's release model is not that of a rolling release so you shouldn't expect cutting edge software with older versions. Looking up the aforementioned website will let you know in advance what to expect. Otherwise as others have explained you can also resort to compiling VLC or adding a repository to use a more recent version(2.1.4 plays the G2M4 sample on my system).

Finally, you could try avconv(many examples provided) from the libav-tools package which is maybe favored by Ubuntu. It works in a very similar fashion to ffmpeg so I would try with the same options and debug from there. If you have one file it makes no sense to reinstall a distribution to try to play it.