The MKV file will be created only if the audio/subtite/etc migration has failed.
Do you have any logs or screenshots?

This is the only screenshot that I have, it's most probably useless though without the console output.

Could there be a problem on my end? I got the same error after upscaling a 20 min episode through dandere2x. The mp4 in the output folder is empty in dandere's case and there is a mkv without sound and subtitles in dandere's workspace folder. This is after using the dandere 1.8 beta though.

I know that I shouldn't expect you to know about dandere, but just giving you all the info I have.

Well dandere2x's using some of older versions of v2x's code, so technically I wrote some of it?
Besides, both of them are based on the same concept.
The MKV file will be produced only if audio and other stream failed to get migrated, so I'm suspecting an incompatible audio codec or something of that sort.

If you disable stream copying or use mkv as output format it should be fine.

What exactly changes when I disable stream copying?
I ran out of disk space while converting the upscaled photos to a video, had 200gb free space. It was a 24 min episode, 720p to 1440p. I used Anime4kcpp for the process.

If "Copy streams" is checked, all streams except for the first video stream (which has been upscaled) will be copied directly from the original video to the upscaled video without re-encoding. At times the codec used in the original video might not be compatible with the new container format (e.g. FLAC from MKV into MP4). Unchecking this will instruct FFmpeg to re-encode all streams copied automatically with a codec that the output container supports.

Isn't there an option to keep the new container format as mkv by default as most anime files are mkv? Will copying streams save space on my laptop? I didn't face this storage problem when I had 110GB free last time, but I freed up another 80GB this time and for some reason ran into the issue.
Edit: I didn't take a screenshot of the console window and forgot to check the temp folder size before closing video2x, so sadly I don't have anything to help you out with this issue.

1. The output format will be MP4 by default.
2. The output format for each file will follow input container format if multiple output files are specified.
3. Copying streams will not save any space, but save processing time as no re-encoding is required. Also, it will preserve the original quality of the stream (e.g., audio stream).
4. This issue should not be related to your storage, but your input file container format, streams codecs, etc.

Leave another message if you're still experiencing issues

I apologize for not following up, didn't get an opportunity to try it again. I'll open a separate issue if I experience the storage space problem again.