What software are you using?
In premiere Elements I belive you can edit mpeg files ok. Less so in Premiere Pro but you might get away with it if you PC is beefy enough.
Anyway, I suspect your real problem is that what you have is a file with the extension ".i". Personally I've never heard of that. If it really is an mpeg file then rename it removing the .i so it end ".mpg". you might get better luck then.
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