in the screenshot you shows, the "edit" tab is selected.
how did you capture the dvd to pc? can't you use pinnacle to capture from the dvd? by using the program you intend to edit with to do the capturing then you ensure that they will be captured in a format that the program will work with.
i hope this is helpful as i don't use pinnacle. when i edit video i use adobe premiere and use premiere's built in capture feature to capture directly from ym minidv camcorder.
it seems to make sense though that capturing from pinnacle should work. is there a reason you can't or are not capturing but isntead copying?