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I'm wanting to transfer video from my Sony Handycam 8mm tapes to DVD but am in need of a good program to do this. The one that came with the camera, Picture Package, is extremely basic and I haven't determined how to transfer the audio - only the video and the video transfer drops frames terribly. Does anyone know of a good, yet relatively simple, program to use for video editing? My computer is a Dell Inspiron 530S, Pentium Dual-Core CPU 2.50 GHz, running XP Pro with an ATI RAdeon HD 3450 video adapter and Realtek HD Audio.

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for my recommendations for reasonably priced yet effective video editing software have a look at these:

Adobe Premiere Elements 7
A very efficient and powerful editing suite that allows multiple audio, multiple video tracks (and therefore layering with differing opacity), Picture in Picture, green-screening, many transitions and effects, ability to burn straight to DVD from within the software, post to Youtube from within the software and much more.

Vegas Movie Studio Platinum Edition 9
again multiple tracks for audio and video (only 4 of each - compared to Adobe's 99), Picture in Picture, green-screening, many transitions and effects

Both accept input from a range of file formats and output a similar range, both are relatively easy to use but offer powerful editing capabilities.
I prefer Adobe - mainly because I started on Adobe and have used Photoshop for years so am familiar with Adobe layouts and terms.

Download a trial version and try them out - best way to see which suits your way of working.

As for the dropped frames - how are you transferring your footage from your camera to your computer? if USB then this is your problem - if you can I would advise you to get a firewire card installed on your computer - this will allow faster, more efficient (ie. no dropped frames) transfer of video and audio to your computer. They cost very little (around the AUS$40 mark) and are easy to install (do a search on Youtube if you like seeing how to do it - Google it if you prefer to read about how to do it)
 
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