You need to buy the Archos MPEG2 decoder, then use a ripper such as DVD decrypter to rip the VOB files from your DVD. You should then be able to play them on the Archos. They're vague about this because it's illegal in some countries even if you own the DVD and don't give away or sell copies.
Archos can play most species of DiVX and MPEG4 but it takes quite a while to do the conversion and getting the audio sync and aspect ratio correct can be troublesome.
Mostly, I use my Archos in a docking station to record TV off-air. I'm not sure I'd want to watch a whole movie on it.