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Attempting to play regular, encrypted DVDs using xine by itself will not work. It will complain that it needs a plugin to handle the DVD data format. Here is how to download, compile, and install the required plugin.

Download and install the following RPMs for your version of RedHat from FreshRPMs (link dead):
xine
libdvdcss
libdvdread

Download the DMD plugin (xine_dmd_plugin_1.0.2.tgz for pre-0.9.9 xine versions, xine_dmd_plugin_1.0.4.tgz for 0.9.9 or later xine versions) from this site (link dead). Check the Files section for a local copy, which may be out of date.

I use checkinstall 1.5.1 or later when I am installing non-RPM software. This handy package lets you generate RPMs or Debian packages from software source code in the .tar.gz format. Find it at Freshmeat or the author's site.

Build and install the plugin (replace x with 1.0.2 or 1.0.4 accordingly):
tar xvfz xine_dmd_plugin_x.tgz
cd xine_dmd_plugin_x
./configure
make
su root
[enter your root password]
checkinstall
[when running checkinstall, select R to create an RPM]

The plugin has now been installed as an RPM, which will make future removal of the plugin (when new versions appear) very easy. However, the path the plugin was installed to is incorrect for the version of xine we have installed, so we need to make some symbolic links so it can see the new plugin. As root, execute the following commands:
ln -s /usr/local/lib/xine/plugins/xineplug_inp_dmd.la /usr/lib/xine/plugins/xineplug_inp_dmd.la
and
ln -s /usr/local/lib/xine/plugins/xineplug_inp_dmd.so /usr/lib/xine/plugins/xineplug_inp_dmd.so

Make a symbolic link /dev/dvd to your DVD-ROM drive. For example, my first CD-ROM drive is my DVD-ROM drive as well, so I had to run ln -s /dev/cdrom /dev/dvd as root.

Now when you start xine and push the "://" button, you will see a "DMD" button at the bottom of the set of buttons on the right hand side. Push that button and you will see the chapter list for the DVD. Click any chapter and push the right-triangle button to play it.