You need to author it in a program that will turn your mpg file into a DVD-Video compliant folder and then burn it to a disc. The first one I ever used was NeroVision Express 2. It is simply a matter of adding the mpg file and just follow along. It will take you through the steps needed. You can add a menu, apply video effects and transitions, add different kinds of moving text. Once that is completed it will burn the disc or you can burn the results to your HDD and use another burning program. There are lots of editing and authoring programs available. Try visiting Nero, Pinnacle or Ulead and see what they have. I just listed three, there are a lot more.
You don't need an iso file you need to do what fasfrank said. It's not really a matter of converting it to a different format. It needs to be authored. Sonic Mydvd is another program that will do it. It's not a great program in my opinion but it is very easy to use.
