Importing avi into iMovie

I'm trying to import an .avi file to iMovie but the file is "greyed" out. Any ideas?

jimfogden, don't give up hope yet! That £15 isn't wasted yet. The Beta version of MPEG Streamclip has some special instructions on how to install the MPEG-2 QuickTime Playback component under Lion. In particular there's an installer script called Utility MPEG2 Component Lion that they recommend you use:
The installer of the MPEG-2 Playback Component may refuse to install the component in Lion. Apple states the component is unnecessary in Lion, however MPEG Streamclip still needs it.
To install the component in Lion, please download MPEG Streamclip 1.9.3b7 beta above; inside the disk image you will find the Utility MPEG2 Component Lion: use it to install the MPEG-2 Playback Component in Lion. The original installer's disk image (QuickTimeMPEG2.dmg) is required.
The current versions of MPEG Streamclip cannot take advantage of the built-in MPEG-2 functionality of Lion. For MPEG-2 files you still need to install the QuickTime MPEG-2 Playback Component, which is not preinstalled in Lion. You don't have to install QuickTime 7.

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