Know nothing about "Muvee" - anything created with a cutsey name can't be taken too seriously - IMO! I would look to something else besides Windows MovieMaker.
The well known names of consumer editing software all offer free trial versions available via download - Pinnacle, Adobe and ULead - my personal preference is ULead Video Studio.
The user interfaces are pretty easy to understand - simple editing with added scene transitions, effects and etc. seems difficult when first confronted but, like anything else, once you figure out the basics it's not difficult.
Firewire best transport for PC capture. I suggest setting file capture setting to highest quality mpeg2. You can capture as avi but files are MUCH larger and with Hi8 analog quality I don't think you will gain anything.
There are tons of threads available via search on tons of forums that will give detailed steps for working with different software from capture to editing to rendering the program to creating the dvd program with chapter menu pages and burning the DVD.
goodluck
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