When you get to this screen, click the caret to the right of "image file" and choose the optical disk burner...
Click to enlarge
An ISO file can be played on Windows PCs. It's seen as a drive letter, and can be opened in a viewer. MPC-BE is a good choice.
If the file system of the ISO is examined, you will see VOB files. They contain the video. Double-clicking on a VOB should bring up a player.
The ISO can also be used to burn a DVD - with software like Express Burn.