Vamshi,
Using different files for different languages doesn't work yet. All you can do is to internationalize a package, which means that you edit your package's adp files (not templates) like you have demonstrated and then run them through acs-lang's interface. That brings all the phrases you have marked to db and makes them so called keys. Please check the Package Developer's Guide to Internationalization found from http://www.collaboraid.biz/extranet/i18n/documentation .
Then you can either turn the translator mode on (in /acs-lang/admin) or bulk translate the individual keys. I'd recommend using first the tr. mode, since it gives you the possibility to see the phrases in real context. However, you should probably check also the bulk translate interface, since there you can see if you have some translations left to do.
But please remember, that you do need to work on Head (as Peter says above) and that the current i18n work has been targeted to translating the packages' interfaces, not the actual content. The latter will be addressed, too, but it's still under development.
