iMovie is a great video editing tool but I've learned through painful trial and error that it's very fussy when it comes to formats. It won't even accept videos in MP4 or AVI format. Try importing one and although it will say it's generating thumbnails for that clip, iMovie will hang or the process will just go on and on until you fall alseep.
The problem is that iMovie is designed specifically as a DV (or HDV) application. Therefore the only format it works properly with is DV. If you're importing video from a digital video camera, then the format will already be DV or HDV and you've got nothing to worry about. However, if the footage is from any other source - such as a ripped DVD, YouTube or mobile phone, then your only option is to convert it to DV.
Unfortunately, there are very few applications out there that allow you to convert to DV. However, here are two worth trying:
MPEG Streamclip My tool of choice although be prepared for a long wait because it takes absolutely ages to convert to DV. A 20-minute DVD rip sample in VOB format took around an hour to convert to DV format. The customisation options, however, make it a really professional tool that gives you control over absolutely every aspect of the conversion. Best of all, you can select in and out points for only those parts of the clip that you want to convert.
Drop2DVD A very quick and simple tool that can be very hit and miss and lacks a GUI. Conversions are performed simply by dragging your video clip into the Drop2DVD icon before the Terminal is automatically launched. The conversion process is fully automated but you have absolutely no control over how it's performed. In my case, the conversion completed successfully but there were lots of error messages relating to the frame rate which meant the file was unplayable.

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Hi This article must be for iMovie 06 and is correct for that version, Streamclip is a great free application. A not free but not too expensive video converter is VisualHub, it's the best by a mile, very easy to use and very quick. Ithink it's around twenty US dollars or less but is well worth it as it converts pretty much anything. For iMovie 08 I've found that I can import .mov and mp4 files in and it allows them to be edited no problem. They are exported as MP4 but have a .m4v file extension which I guess means the same as MP4. I haven't got around to trying anything else yet. 08 is much easier to use than 06 (although I liked 06 as it was) but it has a few features removed such as reverse play and slow motion which is sad, they were fun to add into movies. Don
Thanks for the tip Don - if VisualHub is quicker than Streamclip, then 20 dollars is a small price to pay because Streamclip is painfully slow.
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