850 MB for 4 minutes is about right for a movie captured as AVI format.
DVD use highly compressed MPEG2 format, hence you can get much more on a DVD.
My advice would be to capture in lossless AVI, do your edits, and then encode to MPEG2.
Try and persevere with the Adobe Premiere Elements though, it really is far superior to Movie Maker.
COMPAQ something or other with 500Gb Boot Disk, 1Tb external Firewire Disk, 4Gb Memory and a super duper sound card, 19" TFT Monitor etc etc etc
Sony TRV33e : Sony TRV310e : Canon XM2
Sony Vegas Studio editions to v11
Remember, there is always more to learn than there is to teach.