Save as a small WMV file.
Google for "iPod converter" and you will find a ton of products available to
convert your video to the iPod format (MP4 I believe).
As far as connecting analog to WMM it is a topic of many discussions and
threads in this newsgroup.
The best way to accomplish the task seems to be to purchase a Dazzle90 from
Pinnacle studios.
This unit allows the analog camera to connect to it and converts the signal
to digital. It is connected to the computer via USB so Movie Maker will
recognize it and capture through the Dazzle.