.avi is a container format that can contain movies in dozens of different codecs. Divx is one possibility, but you can't know without opening the file in Quicktime or VLC and checking the movie properties.
If you can play the movie with sound and video in Quicktime, you can probably just import it into iDVD (part of iLife) and make a DVD.
If it's a divx movie, it won't play in Quicktime. However, the new Toast 7 is supposed to be able to burn divx movies to DVD.