So the video you want to use is actually on two DVD's? Right...you need to download a DVD ripper software that will rip the files to either .avi or .wmv in DVD quality. I've got Magic DVD Ripper (clicky) and the trial version will work fully for 5 times. The trial is OK but I'll let you have the *full* version if you want so PM me if that's the case.
Rip the DVD's contents using the software (just rip all the video and then delete the stuff you don't need) and then import that into Movie Maker for all your editing etc.
PM asap and I'll get you the *full* version.

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