The SR 10, used to record Hi def AVCHD
cannot be edited by WMM
You need to either record SD.( mpeg2) . (Vistas WMM ( but not Xps) can edit that)
or Record as HI def then convert to mpeg2 as youve done
With the SR10 you will need to move on from WMM
Sonys Vegas movie Studio Platinum Deluxe can be tried as a trial
It is not as easy to use as WMM but ultimately more functionality
It isnt the only one but WMM would be easier than all of them
The SR10 is a fine camcorder but it would seem you didnt quite research it before getting it..

!!
However as suggested SD is not bad as that is what you will be turning it into but if you want a Hi def "master" then there is no getting past converting