I raised this problem a while back but I've got a bit more info now.
When I capture footage (via firewire) from my camcorder (Sony DCR-HC40E) the audio on the raw avi file that's produced seems fine, but as soon as I drag it onto the timeline of the editing software (either in Windows Movie Maker or Showbiz) the audio seems to inherit a nasty tinniness to it. Is it just that I'm using crap software or is there some magic remedy anyone can suggest.

Does it sound tinny when played from the timeline, or when exported to a WMV file?

The tinniness can happen when the sound is exported at a lower frequency without being resampled. When I was using MM2, I used a separate audio tool to resample the sound down from 48kHz to 44.1 (the frequency being used by the WMV encoder), and this removed the tinniness.

Jason