An ISO file is an image file (or archive) of an optical disk (such as a CD or DVD). It isn't possible to open these in Windows Vista without extra software that allows you to "mount" the ISO file to appear as an optical drive.

There are other formats, such as BIN/CUE and NRG that do the same job but in a different way.

There are several free applications that will let you create a virtual optical drive to mount the image files, such as:
Assuming you use Deamon Tools, install the software as instructed. This will install a virtual CD drive to your PC (showing as F: in this example).

To mount an ISO file, right click on the Daemon Tools icon in the system tray and click Virtual CD/DVD Rom > Device 0: [F:] No Media > Mount Image:

mountiso1.jpg

This will bring up a window where you can select the ISO file on your computer. Simply locate and then click on the file name, followed by clicking the Open button.

mountiso2.jpg

After a few seconds, Daemon tools will have mounted this ISO file to the virtual CD drive. You can now launch the CD just as if it was in a real CD-Drive in your PC. In this example, we would open the F: to view the files.