Hi, no that is not right. Alcohol 120% uses this .mdf image system called 'fantom cd'. The mds is interpretation data for the complete image file. The mds is also the file that is used to burn the image. I am sure Alcohol 120% is the only software that uses this format but there are some tools to convert like MagicISO, UltraISO and possible more.
Also make sure the image is made ready bootable for use in dreamcast. If the image has an audio track inside some 1-2MB big then your image is bootable. If not use the fastboot procedure or use Ex0skelet0r GUI for Selfboot also found within this forum.
So the conclusion is that you should google and download one of these programs to convert or use your own Alcohol 120% software. Good Luck.