What you need is an flv convertor (or converter) , this one is online and will change to avi (for Windows)
http://vixy.net/
Some people prefer to use Realplayer to do this. Use the free version.
http://uk.real.com/player/more
If you intend to watch the dvd on a computer then keeping it as an avi file will be OK. If you want to watch it in a dvd player then you will need to re-encode it as a vob file. Sothink do a free utility to do this
http://www.sothinkmedia.com/movie-dvd-maker/