Plex won't play ISO files, or even raw DVD files.
This is getting into a grey area since Copyright law isn't well established on this topic. The TV/movie industry wants to say you're merely licensing the content when you buy a DVD, but that if you accidentally destroy the DVD you need to buy a new one.* Which makes no logical sense since a license isn't a physical thing, but that's what they argue. The courts haven't decided either way yet, though there is precedent that making backup copies is fair use.
But since it makes no logical sense:
Go to this site, grab one of the recommended tool(s), and follow the guides to convert your DVD to a format Plex can play (h.264 and MPEG4 have the widest support, mkv, avi, mp4 are just...