When you find a clip that you want to add pixilation t,o you need to first drag it into a sequence through either the Timeline or Storyboard. Timeline is going to be easier if you are editing clips while adding these effects. But, if you just want to add single effects to your Windows Movie Maker clips, then the Storyboard is going to be a great choice. Right click on the clip, and go down to Video Effects. This will bring up the dual columned video effect menu with the effects available on the left hand side, and the ones on the clip are listed on the right.
Find Pixelate from the left hand column, and press the Add button in the middle to bring it to the other side. Now, you can just press OK in the lower right hand corner, and it will be applied to the clip. You can also add Pixelate to your clip in another way. Go to the Movie Tasks side bar, and select “View video effects” from under the Edit Movie banner. This will put a whole host of effects available in the Collections window, where you can select them individually and get a preview of them. Just select Pixelate, and drag and drop it onto the clip you want to alter.