Can a touchscreen monitor (12-15″) be set to control a DVD player?
I don’t know how to do the DVD image thing (on a PC), but as for limiting access to the system functions, there are probably quite a few, just search for Windows, Kiosk and DVD. These are the first two I found, they seem kind of expensive, there are probably plenty cheaper ones, also maybe check out windows media center (which is also expensive, but it might be worth it if you plan on doing this a lot) and maybe freevo (free but linux only).