IMovie '08 Capacity Full and Cannot Transfter DVD's into Macbook

I recently purchased a 13" Macbook Unibody off eBay. The unit is in good shape and the previous owner has installed a Zagg Invisible Shield over the entire Macbook and the battery holds a full charge. I bought the Macbook to use editing some old VHS footage I had converted to DVD.
When I try to import a DVD to my desktop so I can edit it using iMovie '08, I get the error "Unable to create 'DVD Video Recording.dmg' (Input/Output Error). At the bottom of the screen it says DVD Video Recording Capacity 2.1 GB
Avaiable 0 Bytes
Used 2.1 GB
Number of Files 4,293,886,887
The Space Utilized indicates: 20.09 GB and Space Free: 277.69 GB. When I received the Macbook I inserted the Applications Install DVD and entered my personal info. I thought this was the clean install you are referring to?
When I purchased the item, the previous owner stated the only blemish was a dead pixel at the bottom of the screen and he showed a picture of it in his add. After re-installing the applications DVD, this one dead pixel is no longer there. I don't know if this is a clue, but I am including all the info I can.
I checked out System Memory in the Activity Monitor and it indicates
Free:2.97GB ; VM Size: 31.57 GB
Wired: 414.92 MB Page Ins: 167.48 MB
Active: 322.36 MB Page Outs: 0 Bytes
Inactive: 45.57 MB Swap Used: 0 Bytes
Used: 782.80 MB
When I click on Disk Activity in indicates:
Reads In: 34065 Data Read: 1.4 GB
Writes Out: 11885 Data Written 703.89 MB
Read In/Read Out and Data Read/Data Written all say 0 Bytes
When I double clicked on Activity Monitor it indicates:
Real Memory Size: 18.43 MB (this fluctuates between 18.39 and 18.50 MB)
Virtual Memory Size: 420.77 MB/421.00 MB
Shared Memory Size: 0 Bytes
Private Memory Size: 8.54 MB/8.71 MB
Virtual Private Memory: 42.45MB/42.67MB
Why do these numbers fluctuate every second or two?
Why won't my Macbook Transfer DVD's into the hardrive so I can edit them with iMovie? Thank you for your help.
Curtis Bradley, R.Ph.

have you tried my workaround for importing from DVD?
CLICK
.. ok, works only in 95% .. some people complained not all files get converted with this method.. haven't found out why..

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