Recently, I saw many how-to posts on forums where people asked for custom formatting of alert emails in MOSS 2007. I thought sharing it here will be a good idea.
SharePoint maintains the alert configuration in AlertTemplate.xml which can be found in the <12 hive>\XML folder.
In this file, there are <AlertTemplate> elements for each specific list type i.e. Document Library, News, Announcements etc. There is also an <AlertTemplate> section with type <SPAlertTemplate.GenericList>. This can be used to apply settings to all the lists.
To change the format of emails, one should update the <Format> Element of the specific list type.
To publish the changed file to Sharepoint, use the ever useful command STSADM
stsadm -o updatealerttemplates -url