Another thought as well as negrete's suggestion. It would help if you had QuickTime Pro for export options. MPeg Streamclip (donateware) which will also allow you to convert mpeg to other formats. It will also allow you to select the particular section/sequence for export. iMovie can import more formats than what the earlier versions could. But still, it has limitations. I very rarely use it however (I user Final Cut P.) If it's an avi format you have, then you'll need the appropriate codecs/plug-ins to convert it. Be that DivX/XviD/3ivx, etc. You can downld these.

BTW the original format iMovie imported was quicktime dv. I can't remember the newer formats it can import now.