Windows Live Movie Maker is a free offering from Microsoft that offers novice and average users the ability to edit video and from there, be able to share/publish it to Facebook, YouTube, eMail, DVD and even custom resolutions. It's a basic editor with very simplified interface, and it's part of the Windows Live Essentials Suite of applications.
It's a basic video editing package, but all the video formats it's supposed to support, the application doesn't support those standard video formats until you load the proper codecs. This isn't an end all be all solution, but it's important to mention when dealing with Windows Movie Maker; it doesn't support all the [listed] video formats right out of the gate.
A lot of users that want to use Windows Movie Maker 2011/2012 don't know this. If you are seeing this issue, your problem could be attributed to several things [video drivers, DirectX, codecs or system patches], but it's important to start with simple solutions versus what Microsoft normally does, which is recommend users completely reinstall Windows Movie Maker.
So you your issue is you can hear the audio, but you can't see the video that's playing; this means that means your drivers or your codecs are messed up.
Windows updates and Video Drivers
As a suggestion, if not already, you should visit WINDOWS UPDATE and see if there are any updates to your system. This might help you. It's not an absolute, but it has helped others; based on other experiences and responses from the Windows Movie Maker forum.
You should also visit WINDOWS UPDATE and see if there are any updates to your video card. Video driver updates for the Windows operating system could be listed as 'optional' updates, you may have to select them manually to update. This option might help you. It's not an absolute, but based on other experiences and responses from this forum, it has helped others resolve their issues. Here are some common video card providers.
Also, note that a correction to the issue could be as easy as downgrading your video drivers as well as updating them. Keep this in mind because if you aren't finding resolution with this post, you might want to come back around to this option.
CODECS in general; what you need to know about codecs, [simplifying] is that they dictate whether or not the audio, video or both are recognized properly by Windows Live Movie Maker [or any other media application for the most part], and it's important to have the right codecs installed/updated.
It affects the performance of Windows Live Movie Maker and it also affects the rendering of the videos/audio inside the application— And since Windows Live Movie Maker offers no automated assistance in resolving the issues of codecs, loading the proper codecs for Windows Live Movie Maker is left to you; the users/customers.
This is a Wikipedia link on detailed codec information:
This is a simple video on codecs:
You should make an attempt contact the manufacturer of the device and see if they offer any download'able codecs/drivers for your device- making it compatible with your operating system.
The installation of the K-Lite Codec pack isn't complicated. Here's a link to the illustrated [screenshots] process of the installation for K-Lite, with the download link.
Fallback and Punt [convert video]
Unfavorably, there may be a point where you have tried everything you can think of, or if you are under a deadline and you need something to work NOW. I understand, I've been there; it's an ugly place.
If you haven't tried already, try converting the AUDIO to WMA or a WAV before using it in Windows Movie Maker. WMA and WAV is Microsoft's audio formats, Windows Movie Maker should be able handle either of those just fine.
The problem with video conversion is that it's a bit time consuming, predicated on the size of the video and the performance of your system, but conversion makes sure the video is in a solid format for video editing.
Freemake Video Converter is one of the most recommended video converters for assisting users converting their SOURCE videos to WMV. Freemake Video Converter is extremely easy to use, but there's some 'opt-out' software bundled with the installer that makes user nervous. I've created a post to illustrate the process of the download of the application, the installation step-by-step, explaining which options are optional. I have also provided some screenshots on just how easy it is to convert your video(s) to WMV.
I hope you find this information beneficial.
Perhaps/maybe you can find some assistance in the Movie Maker forum:
If you'd like, you can leave feedback for the Windows Movie Maker team for suggestions/improvements in future versions: