Okay, that's two questions I can easily handle.
ogg got part of it, but I'll go over it again. I'm too lazy to link everything. Google the stuff I haven't.
As mentioned, Media Player Classic and BSPlayer will automatically load up .srt files with a same-named .avi file automatically. In MPC you can go to File->Load Subtitle to get the file loaded. I highly suggest using MPC anyway, since it supports
everything and is far less bloated than WMP 10.
To get .srt files onto a DVD you'll have to convert them to DVD format. You can do this a number of ways; the easiest ways are thus:
1) Convert the entire movie/film/TV show/etc. to DVD with
DIKO. DIKO is a freeware MPEG-2 encoder GUI which works oustandingly well, though it works even better if you visit the forums and apply the
HC Encoder hack. All the DVDs I've made with DIKO using HC Encoder are easily as good as the DVDs I've done with TMPGEnc and other utilities.
To convert the subtitles you'll have to enable the "author DVD" option in Configuration. You'll want to look over most of these options anyway. When it comes time to convert the movie, select the AVI file(s) and corresponding SRT file(s). (
You'll see where) Hit start and let the thing rip; you'll have your DVD in a few hours, complete with selectable subtitles.
2) If you've already created your MPEG-2 DVD video and audio, you can also convert with the free version of
DVD-Lab. DVD-Lab is seriously complex to use, but in that complexity lies a lot of options. To add the subtitles you'll have to open up the "Movie 1" window and click the "Sub 1" button on the little timegraph thing. In the window that opens up, hit "import" and select your .srt file. After that just pick your font settings, drag/drop the audio and video, then author the DVD. Unfortunately, if you have more than one .srt file you have to join them together. You can do that with Subtitle Workshop.
All in all, I highly recommend DIKO, because it's both free and easy.
Good luck. Feel free to PM me if you need help.