New to video editing, advice sought.

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So, I went on holdiay and took an old DV camcorder along with my D200. Captured 3 tapes worth of footage and now I want to get round to editing and putting it on DVD for family.

I have two PC's, and XP box (C2D @ 2.4Ghz, 4Gb RAM, soon to be W7 when the disc arrives) and an A64 3700+ CPU with 2Gb RAM and Win 7 RC.
I've captured the tapes onthe XP box with MS Movie maker as it has Firewire then copied the video over to the Win 7 machine to edit with MS Live Movie Maker.
The first tape was about 13Gb of AVI and it took at least 3-4 hours (I left it going overnight in the end) to make into a DVD. Being new to this, is this typical or is something wrong? The DVD quality wasn't anything near as good as the DVI capture. I expected some IQ loss due to compression, but not that much.

I'm currently trying to edit all three tapes into one "movie" of the main parts of the holiday and I'm dreading how long it'll take. Each capture is about 11-12Gb!!
So, what can I do and use to get good quality DVD's? Is it Software related for good image quality and the slowness is due to an incapable single core CPU?
 
Thanks for the replies, this is turning into a mine field!
So Windows Live Movie Maker is pap and I should be using something else.
I'm looking at the Pinnacle SW on that rainforest site and was wondering whether The MovieBox 12 Plus (I have to grab some video of an old camcorder too) has decent software bundled with it or is it just cut down versions?
 
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