AVI is to video, what WAV is to audio.
It's uncompressed and universal. Since you need an interim file before compressing to WMV, you will get best results by NOT compressing it before.

-Michael

cassp: enjoyed your humorous response.

Ok, it appears Amelius (recommending Mpeg2) & Michael (recommending AVI) have differing recommendations here so I'm still left confused. In the meantime, my friend just gave me an Mpeg4 version of the video
footage. I presume that Mpeg4 is better than Mpeg2 in that it's a newer technology & and better preserves the orginal data right? The Mpeg4 plays fine on my PC in 'Real Player', but unfortunately not in 'Windows Media Player'. I hope to get the footage edited and converted to WMV format early next week.

Shakil, thanks for pointing out the video vs audio trade off quality thing. Now I need to figure out exactly what audio/video quality settings I should convert the file to in order to reduce the file size as much as possible, yet preserve acceptable video & audio quality. Any recommendations on what compression setting I should set the audio to, as well as what compression setting I should set the video to? Thanks.

- Scott