Simplistically, an .iso file is an exact image of a CD or DVD. It is a useful file format for distributing the equivalent CDs over the Internet or making backups of your software. The only problem is more often than not you will be wanting to recreate a "real" data CD from an .iso file and if you're running Windows (XP) it doesn't have anything built in to it to do that. Copying an .iso file onto a CD as though it was just any other file will not work; you just get a CD with an iso file on and not a recreation of the original CD.

There are any number of CD burning programs that will do it for you, but if you want something lightweight, easy and free, go get the ISO Recorder power toy for Windows XP, 2003 and Vista. It intergrates into Windows such that upon right-clicking an .iso file there is a "Copy image to CD option"; choose that, put a writable CD in the drive, hit "Next" a few times and you're done. A perfect rendition of the CD is now yours.

The tool can also do the reverse and make .iso files out of existing CDs you might own.