For avi files, I'd recommend Virtualdub. It's actually a full fledged open-source video editor that was designed by a guy while he had spare time at school, and has become a cult favorite.

I can take a full length movie in avi form, cut out the scenes one by one, even edit out parts, if I want to, and then save it as an avi using 'direct stream' for both the video and audio. Virtualdub then reproduces the avi chunks one by one without re-rendering, or recompressing them, so your output is a basically a copy of the original, with no drop off in video quality. Something like WIndows Movie Maker always recompresses, so the copy is always a little less true to the original. But, WIndows Movie Maker works with wmv, while VIrtualdub only copies avi's. There's also Virtualdubmod, another open-source editor that's a mod of Virtualdub, that lets you load, edit and save mpegs. Actually, the newer versions of Virtualdub may do this now too. Both can load some other file formats, but not wmv (though some early versions work with Windows media like wmv and asf, but the feature was taken out after MIcrosoft complained).

BUT, as I mentioned, though you can load and edit mpegs, you have to re-render and compress the new file, so you can't use direct stream copy. And then, you have to figure out where to find the codecs (Xvid, Divx, mp3, etc. ) within the program, and configure the bitrates properly, etc.

There are a couple of good video and dvd editing forums that have whole sections dedicated to Virtualdub. Check out Afterdawn, Doom9, and Videohelp