MPEG-2 are just too complex
They have full frames/images every so often. Between them the frame info is only the differences between one and the next. The decompression codec needs to know how to put the pieces back together. It's too complex an issue for us to get into; suffice it to say for now that, if the pieces at the receiving end can't be put back together exactly as needed, the process doesn't work.
Think of it as the error message saying: '.... hey, there are too many pieces in this file for me to put it back together!'
What's a DV-AVI File?
While DVDs with MPEG-2 files were being made by professionals, the first digital video camcorders for consumers used cassette tapes with Digital Video (DV) files recorded on them. These mini-DV and digital8 camcorders, when connected to a computer by a firewire (iLInk per Sony camcorder manuals) let Movie Maker import the files as DV-AVI.
Think of DV-AVI files as being a set of frames, with each frame having being a self-contained picture. Such files are large but much easier than MPEG-2 files to put together and edit. You can chop off the frames you don't want and use the good stuff. Movie Maker loves them.
Why Does Movie Maker Use One Type and Not the Other?
When Movie Maker was first released, Microsoft didn't provide an MPEG-2 decompressor (codec). They thought users could get them elsewhere, add them as needed, and Movie Maker would work with MPEG-2 files. The problem was they mostly didn't.
Codecs that let Movie Maker work with MPEG-2 files were elusive, few and far between. Over time, the collective wisdom of users shifted from finding the codec to doing file conversions instead. It's only in Vista's Home Premium and Ultimate versions that a new Microsoft MPEG-2 codec is provided, and such files might work in Movie Maker version 6. My experience with Vista Ultimate is pretty good but not 100%, and I still recommend the tried and true file conversions to create DV-AVI files from MPEG-2 ones.
Bottom line: consider converting from MPEG-2 files to DV-AVI
An interface has too many methods to fire events from
How can it be that such a long phrase that expresses so little in meaning is by far the leading query term by those searching my personal website for help?
This series of articles explains why it occurs and what you should do about it.
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1. "An interface has too many methods to fire events from" Error