MM2 supports these formats :
* 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
Were you able to play other DV-AVI files in movie maker ?
May be you can take a converter and convert the file into something which MM2 can play ?
Let me know if it works ...