An ISO is type of image file among many.
You can read more about it here:
http://en.wikipedia.org/wiki/ISO_image.
An image file is a file on your harddrive representing something which was a either magnetic charge in a sector of the physical harddrive representing the bit 1 or no charge at all representing the bit 0. Same thing, but the difference lies in the portability of data.
You can send an image file containing all data exactly as it is on your harddrive over the internet while the physical harddrive has to travel the old way through snailmail to achieve the same result.
When you say convert ISO into a harddrive image it does not make very much sense as an ISO can be a harddrive image.
What you could do is write an ISO image to a harddrive, making the content of harddrive the exact same as the ISO file or vice versa as mentioned.
If this isn't the goal, could you be a bit more specific in regards to what you want to achieve with the ISO you want to convert? This is just the tip of the iceberg in regards to what can be done with images.
