If you want to edit recorded video, then use AVI or MPEG rather than ATI's
own VCR format that nothing else can make sense of. (Settings - Personal
Video recorder - Map Preset).
Then any video editing software (eg VirtualDub http://www.virtualdub.org/index) will do it.
The ATI Library used to have a utility to convert existing files from .vcr
to mpeg - may depend on which version of MMC you have.