Microsoft makes a lot of editing programs -- for words, numbers, presentations and pictures -- but it gives away hardly any of them. Its new Windows Movie Maker 2, however, is a free download for any Windows XP user.

That's a big deal, and a decent one, too -- provided you understand this program's limits.

Movie Maker 2 (www.microsoft.com/windowsxp/moviemaker) differs from other video editors in two fundamental ways. Instead of importing camcorder footage in the standard, space-intensive format, it stores it in a compressed, proprietary format. And Movie Maker 2's export options work best for viewing on computer monitors instead of TV sets.

These design decisions play out in odd and sometimes irritating fashions.

Things start with getting the footage from camcorder to computer, a pleasingly seamless process with a digital camcorder. (Movie Maker 2 can copy video from analog sources, but few PCs include analog video jacks, and the ones that do almost always bundle higher-end video software.)

A few minutes after I'd plugged a Canon Elura camcorder into a laptop's FireWire port, Movie Maker 2 had yanked in the footage and split it into clips based on the time stamps at each pause and stop on the tape.

It's easy to blitz through this process, but you shouldn't without considering its video-import options. The default choice, vaguely labeled "best quality for playback on my computer," will save the recording in the Windows Media video format, conserving disk space at the potential cost of image quality.

Movie Maker 2 judged my laptop's 1.2-gigahertz Pentium III-M processor too slow for a full-quality copy, so it encoded everything at a VCR-esque resolution of 320 by 240 pixels, about a quarter of the camcorder's standard format. I only noticed this after I'd taped over some of the original footage.

That's unacceptable. The program needs to warn you before pixels go down the bit bucket so you can decide if you'd rather use the "digital device format" option to make a perfect copy of the tape (at the cost of eating 178 megabytes of disk space for each minute of video).

Freshly imported clips also looked scrambled until I quit and restarted the program.

Movie Maker 2's multiple-pane interface makes video editing clumsier than necessary. Its preview pane is too small, you can't trim a clip until you drag it into the timeline pane, and then you face the jarring experience of positioning crop marks on a thumbnail image in the timeline while looking in the preview pane to see where you are in the clip. It feels like trying to draw while looking at the paper with only one eye.

A Microsoft Web page suggested an easier option, one missing from the help file: Use the preview pane's controls to scroll through a clip, then set crop marks with menu or keyboard commands.

If you're disciplined enough to shoot or capture only good clips, Movie Maker 2's AutoMovie option can make editing easier yet; the program splices and dices footage for you, deleting unfocused or lens-cap-on sequences and inserting transitions as needed. But don't expect it to transform a tape's worth of raw footage into Academy Award material.

Movie Maker 2's strongest offering is its library of dozens of eye-catching video effects. You can make your film look antique, pixelate it into a blur or warp its colors, then stitch clips together with Hollywood-slick fade, flip and curl transitions.

These tools also helped dress up a photo slide show. I quickly imported some shots from the My Pictures folder, dragged in transitions, added a song, entered titles and captions, and in 20 minutes or so, I had a polished presentation.

When it comes to soundtracks, though, Movie Maker 2 is barely out of the silent-movie era. It can't extract audio from a clip, doesn't include any sound effects and can't vary a soundtrack's volume as it plays. Just picking a song is a pain, since you're confined to the My Music folder's finicky artist/album/song hierarchy.

Movie Maker 2 offers many ways to view your finished movie, none of them particularly TV-friendly. Its advertised ability to copy a movie to CD or DVD is useless in practice, since it formats the disc in a new "HighMAT" format no DVD player can read.

Movie Maker 2 can also copy footage back to a camcorder, but you'll have to wait for the program to export Windows Media footage -- about a 40-minute effort for two minutes of movie on my laptop

A faster computer would take less time. But it would also pack a much bigger hard disk, making the compressed Windows Media format less crucial in the first place -- unless, that is, you want to keep your edited video on the computer and share it from there. Movie Maker 2's numerous PC-centric export formats suggest the designers had exactly that in mind. You can save a movie for viewing on a Pocket PC handheld, attach it to an e-mail or post it to a Web site, with a wide variety of resolution and bit- and frame-rate options.

E-mail export is simple but limited; any clip longer than a few seconds will be too big to send. (These video clips are also un-viewable in the Mac version of Windows Media Player.) For Web screenings, Movie Maker 2 allows direct uploads to two "video hosting providers," but neither has the manners to post their fees upfront, and one balked at all my upload attempts.

The saying goes that Microsoft doesn't get a product right until the 3.0 version, and that sounds like the case with Windows Movie Maker. The current version could use more time in the studio.

Living with technology, or trying to? E-mail Rob Pegoraro at rob@twp.com.