Yes, if you want to use MPEG-2 formats such as DVDs or SVCDs in Alam2 you need a program called DVD2AVI and one called VFAPI. You can get these from http://www.doom9.net,
they are both free.
First open the file in DVD2AVI, this will usually be an .mpg, .mp2 or set of .vob files. Then save the project.
In the VFAPI/Codec folder you need to run setup once. Then you run the 'reader' and open your DVD2AVI project file in it. Hit convert and it will make a small AVI which acts as an index to the MPEG-2 file.
This AVI file should open in Alam or your favourite editing package. Remember not to move the main files or the link will be broken and you will have to do it again.
The image may be squished because it is an anamorphic source. If you want to fix this on the fly then open your AVI in virtual dub, add a resize filter and then frameserve it into Alam or whatever (as in the above tutorial).
Frameserving is a very versatile way of opening formats in various programs because you set up a chain between various processes that need to take place. It is just like those little function boxes we used to get in maths.