Using .AVI files in FCP

Hi (this is my first posting),
I have hard drives (XP) full of AVI files that I must use in FCP. When I import them Final Cut says that these files "are not optimized for FCP" and should be recaptured or to use Media Manager to copy.
I'm new to FCP so when I copied in Media Manager - I don't know what happened. I was assuming I'd get a .MOV somewhere?
Do I need to get the original tape and re-capture on my Mac? The video doesn't look degraded and I produced a video ignoring this message with no problems. Now we're going to move to HD.
Is there a way to recapture an AVI from a hard drive, do I need to? What am I doing wrong (besides capturing to .AVI on XP system). Help .....
Dual G5   Mac OS X (10.4.9)   Final Cut Studio

I'm having the same problem, with hours and hours of AVI files that I want to sort through and can't recapture. I am trying to use Media Manager -- I choose recompress, and pick my destination, but it only creates more AVI files, not MOV files, and I can't figure out why?
When I try to import these new AVI files into my project, I get the same optimization warning... what am I doing wrong? (using FCP 5.1.4)

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