This happens when you have more than one MPEG 2 decoders installed on your computer. To prefer a particular MPEG2 decoder, you have to disable other decoders in Video Edit Magic.
In Video Edit Magic 4.03 and higher, you can disable these decoders using the Compatibility feature. On the Tools menu, click Options and then click Compatibility. Uncheck all MPEG 2 decoders other than the preferred MPEG 2 decoder. If you have MPEG 2 decoders from Cyberlink or InterVideo, you can try disabling them first.
Note that the Filter Compatibility option disables a filter only in Video Edit Magic. It does not affect any other installed applications.
You can download a free MPEG 2 decoder from the following link:
http://www.deskshare.com/download/mpeg2decoder.exe
DeskShare - Support