If you want to do good compilations, you can cut your teeth on Windows Movie Maker, but I found after doing a couple shorter ones, it squawked mightily whenever I put more than a couple minutes of clips in it. I found also it wasn't very good with the kind of tight cuts I was looking for.
So as someone who I think was in your shoes a few months ago, I highly reccomend you scrape up $100 bucks and some change for adobe elements or one of the other editors in that price range, I think you will be a lot happier with the final results. But for free, I will say it's a good place to start out.
As for the video importing, someone else in the thread mentioned dvdshrink, I'd second that, using it to break a film up into smaller 10-20 minute vobs, and then opening those vobs up in WMM or whatever to then edit. Most of these program dont like throwing 120 minutes of video in any format all in one go, so start with small bites and see what your PC can handle.
I've gotten better at it in recent weeks, I just undertook a similar project..I'll post the video link in another thread to try and keep this one on topic. If you like what you see, you can PM me for me info on how I went about it.
