How can I convert Mpeg to Dvd and maintain it's quality

I've downloaded a few rar. files that I uncompressed using UnRarX,
the end result is a mpeg file that windows media player 9 series nor quicktime 7.6 plays.... But the vlc player plays it thou, a bit "wavy".
Two questions I have, first being could this file have an improper "tag-extension" and is there a way to find out it's true format.
Second one is, what steps do I take to put this video onto a dvd without losing the quality?

Thanks..

Getting There...

First off, thanks for the replys.. everyone has been a bit helpful for sure.
So after trial and error I ended up with witch seems to be an all in one. Roxio for the software to convert and burn witch is of course is pretty easy to get the hang of as far as dragging and dropping files.
Same program also showed witch files I was messing with.
I have a couple of formats 1st is Video: Mpeg-2 _ Audio: Dolby Digital
2nd is Video: Divx _ Audio: Mpeg layer 3 audio
I've made a dvd from them and they don't look to bad...
But I still notice "like jagged lines".
(For instance someones arm might look like steps if your paying close attention)
I ask, could this be something I can help within Roxio 8. or 10
Perhaps make extra adjustments that the program might not make off jump while converting?
Possibly convert these files properly in any software if needed... (If anys known)
This being a one off, I've heard about the dvd players that play Xvid.
Would anyone be able to explain to me the proper steps to burn a xvid.
And my main question is for xvid is, if you have a xvid compatible dvd player can you burn this video in the quality that you've seen it on you computer?

Thanks much...