Well Mishap, I mostly leave the technical stuff to a friend. I'll ask him. But, I also have a free converter so for my own storyboard stuff (can't draw) and the rough cuts, I do convert to WMV files but I don't seem to have a problem using them in MovieMaker afterwards.
For the 20 min film we did we used FinalCut Pro and I had a lot of help but my computer isn't Apple so I can't use that one although I did a short course on it. I am planning to get the Windows equivalent but am researching at the moment and will need to upgrade the speed of my processor and get a separate hard drive.
But I don't think you need anything like as complicated to get good results and I like MovieMaker except for the lack of audio manipulation (You couldn't add the sighs as we did for example).
Sorry can't be more helpful but try putting in a search for converting files from MPEG 4. I use Any Video Converter which is a free download.
I'll ask my friend and also let you know when I find a programme just a bit better than MovieMaker but not so complicated as FinalCutPro and maybe you could do the same.
It's all a learning curve isn't it?