Mpeg-4 (MP4) & Video Clip (AVI) Can I import to timeline in S15?

One burning question (no pun intended) I have, is when it comes to MAKING THE MOVIE, is that after I burn a DISC DVD-BEST QUALITY, I also:
Burn a .MPEG-4, (or MP4) which outputs the file to 640x480 and are usually measured in MB's. (usually with my size videos.)

Another step I do is to burn this project video file to a .AVI file, which outputs to a 720x480, and usually a bigger GB file.

Am I not already converting the captured raw video tape into a Avi DV file upon capturing? That's what I thought when I take a analog file, it converts to a Digital file? So when I'm done capturing, editing, I can again save as a AVI file?

When I SAVE the file as a .AVI file, it ends up with the extension if a VIDEO CLIP, not an AVI. So the silly question would be, are video clips and .Avi files the exact same thing?

I do these two steps as a backup, but I'm thinking this is a waste of time and hard space. I will move all these two types of files onto my external HD, but first I'd like to know which is better.

Obviously the bigger AVI -FULL SCREEN sounds far better quality wise, than the smaller MP4 FULL-SIZE, and wanted to know if I could just save the better type file and import or drag them into a timeline for a new project.

I know once they are edited, transitioned, made movie, file, or disc, they can not be re-edited, but I have a lot of smaller 10,15,20 minute short mpegs, or .avi files, I would like to put these on a DVD....Is any of this possible?

I posted here recently, that my Studio 15 has been freezing up and I have to do a System Restore to be able to have Studio work again, but that means I loose all the most recent work before the restore.

I have done the 'system restore' a few times trying to go back and find recent projects that I had been working on prior to my unresponsiveness and freeze ups in Pinnacle Studio 15. Is there a hidden folder I may find these files? I have too much time invested in a whole weekend of lost projects. I thank you for any help.