Cannot import video into iMovie
I think your problem has something to do with not having the right Codecs (the bit of software that translates one type of video to another type). @Martin is right - if you can convert your video yourself you'll solve your problem, but it would be even better if you can teach iMovie to convert it for you. 

Try installing both Perian and DivX (I'm too new to post two hyperlinks, just Google DivX Mac - it's the top link) and then restart your computer - this will install extra codecs to allow you to covert between the different types of video.