That is still illegal. To be legal you have to have the OG copy if you dont have it anymore then the ISO is an illegal copy so you should destory it. but whatever form now on for movies save them as Bin and cue files and XBMC will play them
You can mount ISO in nero to virtual drives...from there you can use DVDDecryptor to decrypt the data...it might even be already...and then use AutoGK to make it into a divx file...then it will play in XBMC.
EDIT: If you don't have nero you can use Daemon Tools to mount the image as well. Daemon Tools is free.
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