you cannot do it from the same computer, you need two sources, but for the DVD Video you can use a standard DVD player.
You need to check the switcher above carefully, You need some way of getting a computer feed into it. Something like the Matrox MXO takes the DVI from the computer and turns it into a video stream.
Also you need to be able to crop this image coming from the computer since you would not want the entire image. PIP is a different from a graphic overlay.
I think this is a pretty hard thing to do on the cheap.
Is there a link to the live news feed you want to use, I would be interested in seeing how that is coming through
There maybe video cards that can combine these things but you need to stop thinking DVD and would just use a QT movie on the hard drive. I don’t know of any off hand.