You'll need to burn the DVD along with the software in a given format,a tutorial of which you can find over google.I suppose you better check on afterdawn forums or try techtree which I believe had posted this guide long back.Anyways here's the link to Techtree's guide
http://www.techtree.com/India/PS2_Di...797-584-2.html
I suppose you'll need to burn this DVD & boot it in the PS2.After that's done just open the tray without restarting the PS2 & insert your Divx DVD after which the software which is already on the screen would try & decode your Divx files.I haven't personally tried it myself but you'll learn it easily from the tutorial.