Rjgula,
Have a look at <a target="_blank" href=http://www.blackviper.com/WinXP/servicecfg.htm>Black Viper's Windows XP Home and Professional Services Configurations</a>. Look for a chart about one third of the way down the page. It tells you that alg.exe = Application Layer Gateway Service Click on the name & it takes you to another page with more information as well as more links.
I hope this helps you make your decision regarding disabling it.
Also, check back here as the others have far more experience than I and may be able to give you further information.
Nana /images/forums/icons/smile.gif