Having searched the forum, others have noted the problem and there has been no explanation as to why VLC can not seem to output an mp4 file, but rather will always output a m4v file, and even warn if one tries to put the 'mp4' extension on the output file name.
Of course one can find other tools that produce .mp4 files, and some are also 'free/open source' programs.
What does VLC do that only produces the iTunes Apple only format. And as a note, it is not just a matter of changing the extension and all is well.