File Encoding

I wanted to compress a folder that was 15GB so that it would fit on a 4.7GB DVD so I right click the folder went into properties, and under the General tab I went into Advance and then Advanced Attributes. under the option Compress or Encrypt attributes I checked the option to compress contents to save disk space thinking that ( disk ) meant my DVD.and not the Local disk c:. It even went further to ask whether I wanted to compress the folder only or the folder along with all the sub folders and I checked that option as well. To my horror every file that I've attempted to download is coming in the format of or what I believe to be, an ISO file. If I burn a movie I may be able to view it on my computer, if I burn that same movie I am seeing from my DVD player: Not supported file or Check disk, with a yellow exclamation mark, or Error. Downloading my games is also to me a waste of time since I can't run it in this ISO file format. It seems to me that I've totally changed the way my local c drive saves my files and I've asked friends and technicians at my job for help and no one seems to know what to do. I've tried the utility System Restore, set my restore date to the beginning of this month and to no avail. My question is, How do I make my computer download and save files the way it used to, NORMAL !! so that I can play my games and watch my movies without ALWAYS having to convert or Encode the files first ( which takes hours I might add ) before I could use it. Your help would be greatly appreciated.

Tech Support Guy System Info Utility version 1.0.0.2
OS Version: Microsoft Windows XP Professional, Service Pack 2, 32 bit
Processor: Intel(R) Core(TM)2 Duo CPU T7250 @ 2.00GHz, x86 Family 6 Model 15 Stepping 13
Processor Count: 2
RAM: 1013 Mb
Graphics Card: Mobile Intel(R) 965 Express Chipset Family, 256 Mb
Hard Drives: C: Total - 305234 MB, Free - 247297 MB;
Motherboard: Dell Inc., 0TT347
Antivirus: Microsoft Security Essentials, Updated: Yes, On-Demand Scanner: Enabled