When Windows Movie Maker won't save for some reason

I've been trying to figure out this one lame problem on a laptop I've been working on.

The problem began with a Flip video MP4 clip shot in HD resolution. You can't import MP4 clips into Windows Movie Maker and edit. You need to convert first.

Problem is this file is 3.9G and runs 51 minutes. I didn't know the Flip device did that. Anywho, I find Mediacoder and it makes an AVI that Windows Movie Maker was able to import and play. The problem I ran into was trying to save it as a WMV file. I even tried plain vanilla MPGs of just a few seconds, and his install of Windows Movie Maker refused to save it. Memory was not an issue, disk space was not an issue either.

What I discovered was saving it as a Digital Video file - as an AVI. It's not compressed as an WMV that Windows Movie Maker can create, but at least it can save shorter clips from the 51 minute video file that converted into an AVI the first time is about 700MB, not the huge almost 4G file it was!

At least these shorter clips could be uploaded to Youtube and shared. I'll have to see what Youtube's limit is per clip space wise. I know it likes clips under 10 minutes long, I just don't recall at the moment what the file size limit is.