I find Windows Movie Maker to be very problematic, since it is so fussy about import formats and only exports as DV avi or .wmv. I personally have no use for it.
If I were editing dvds or other forms of mpeg2, I’d use Womble Mpeg Video Wizard DVD or one of the VideoReDo programs. There are fully functional trials available for them.
Since you may not want to learn a new program just for this task, I’d say you are on the right track converting to .wmv with SUPER before importing to WMM.