Can't edit MPG file

I have an old ATI TV PCI card and am using it to capture video from my 8mm
video camera. I have been able to capture an MPG video file and
successfully burned it onto a DVD.

However,,,,, I would like to be able to edit the MPG file in Windows Movie
Maker. When I try to import the MPG file into Movie Maker 2 I get the
following error message:

"C:\My Documents\My Videos\1993_JUL29_ Hannah's Birth Video\Hannah's
Birth.mpg could not be imported. Unspecified error"

I also tried to run the video through the Windows Media Encoder 9 and it
only recognizes the file as an audio file.

I am assuming that this may have something to do with "codecs" ... about
which I know nothing.
Any help is much appreciated!
TJM