I would use IsoBuster to get the files from the CD to burn them, however this will not work for images of software like a PS2 game for instance...
although I think IsoBuster can still convert the MDS file to a regular ISO for you (but im not sure) if you do a search on google im sure you can find something
Just do a search like "MDS to ISO converter freeware"

Good luck !
Edit: You could use Daemon tools to mount the MDS/MDF files then use your 120% the reimage the virtual drive
http://www.freewarebox.com/free_4752_daemo...s-download.html <--- place to download daemon tools