Windows Movie Maker is a desktop video processing software that
comes free with WinXP: 

Click Start - Programs - Accessories - Entertainment and
finally "Windows Movie Maker"

1. Click "Import video" from list on left-hand side of window
2. Browse and select clips (e.g. avi, mpeg) to import
3. Drag clips to storyboard
4. Click "Save to my computer" from list on left-hand side of window
5. Enter filename and folder and click "Next"
6. Verify setting details say:

   File type: Windows Media Video (WMV)
   Bit rate: Variable bit rate
   Display size: 720 x 480 pixels
   Aspect ratio: 4:3
   Frames per second: 30

   If settings differ from above, click "Show more choices" 
   and choose "Other settings". Scroll down and choose 
   "High Quality video (NTSC)".

7. Click "Next".  Movie Maker will process.  Clicking "Finish"
   will complete movie creation.