This software will be a freeware, which will be used to improve language abilities of English exam takers. My software will play a part of their (BBC-United Kingdom) pod cast (a minute or 2) and the relevant transcript will be displayed. Many audio files and transcript files will be distributed with the software. Is this legal? any copyright issues? if so, what are the actions to be taken to overcome those issues. Permission to use from them is enough, what are the ways to get their permission, an email from them is enough for legal/copyright issues? Please advise.
The bottom line is this:
1) The material you want to use is copyrighted, most likely by the BBC.
2) Under UK law, and in most jurisdictions, only the copyright holder has the right to copy a portion of the work and only the copyright holder has the right to prepare derivative works.
It sounds like you intend to do both: you are going to copy the BBC podcasts, and then prepare course materials, transcripts, etc. based on them. This would ordinarily infringe on the rights of the copyright holder.
There are some exceptions under which a person may use part of a copyrighted work for various purposes. Under UK law, these are extremely limited; the relevant doctrine is called "Fair Dealing."
One thing you very much need to know about fair use and fair dealing laws: the internet is a terrible, terrible place to get advice about them. There are a lot of people online who really want these exceptions to be broader than they are, and have no hesitation in recommending that you expose yourself to a lawsuit to prove their point.
The bottom line is this. What you're proposing to do is an infringement of the BBC's copyright that would be permissible only if you could get permission from the BBC establish an exception to copyright law. To do either one, you need a lawyer; a real-life, non-anonymous, non-internet lawyer. I strongly recommend that you find and speak to one.