Video codec problem

[MuGen]

Xvid has always had bugs relating to card captured video. It's a very unstable codec. DivX 5 is one of the best codecs out there.

Other than the stability of Xvid, I don't see any other problems. Codec stands for Compression Decompression. Since you can view your movie, the codec problem doesn't like in the decompression state. It's compression, thats disallowing you to edit. So it's most likely your Xvid Codec.