First of all, can you post the stats of your Mac like RAM and stuff, because I just like to know what I'm dealing with.
But by the looks of it, it's the file type that iMovie is having trouble with. I heard Mac doesn't work with Avi too well. Luckily, there are extension conversion programs out there. I've never needed one for Mac, so I only have Windows suggestions for you which would be pretty useless.