Windows Movie Maker is pretty restricted when it comes to converting from different formats to some general ones. For example, please take a look at the following allowed file extensions which you can use to import :
-Video files: .asf, .avi, .wmv
-Movie files: MPEG1, .mpeg, .mpg, .m1v, .mp2
-Audio files: .wav, .snd, .au, .aif, .aifc, .aiff
-Windows Media files: .asf, .wm, .wma, .wmv
-Still images: .bmp, .jpg, .jpeg, .jpe, .jfif, .gif
-MP3 format audio: .mp3
These formats are supported but it seems that although a file is supported for importing, if it has been encoded with a different codec, WMM will refuse to import it due to legal issues.
The software you use to extract the files from your phone has the ability to convert them to a format compatible with Windows Movie Maker. I recommend you export to WMV format because it's the standard one used by WMM.
Import the file using Menu > Import > Select the file you want to convert then modify it according to your needs and then use the same menu but Save as.. and choose the output file format you desire.
