Editing a video clip is a more challenging task than playing it, so ones
that play well often have issues in the editing environment.
HD and DVD camcorders are aimed at the shoot and play market, not those who
want to edit. So you need to go over extra hurdles to get to Movie Maker.
None of the HD or DVD camcorders save to DV-AVI files, and Movie Maker isn't
compatible with MPEG2 files. MM6 in Vista would probably work if you get the
Home Premium or Ultimate versions that include an MPEG2 codec.
PS... you're video file was easier to convert than many because it aligns
with the standard 720x480 pixel dimensions of DV-AVI files... if it didn't
I'd have taken it to VDubMod for resizing along with the rendering using the
Panasonic DV codec.
All of what I did for the conversion is covered on my website's Import Movie
Source Files > Video > Discs page.