Organizing a million chapters into something coherent

HDD camcorders are worse than DVD based camcorders, and this is one of the many reasons why.

What you need to do is edit the material into the two movies that you want. I don't know the two software packages you refer to, so I can't help you with details on how. I suspect Power Director is probably the one to look at for this.

I would edit movie A first, get it the way I wanted it, then output it as a single video using as little compression as possible. Once that was done, edit movie B. After I was happy with the two of them, encode them to mpeg2 with DVD compliant specs, and author the disc with the menus required. This is probably where Power Producer comes in.

Sorry if this sounds a bit vague.

It appears that your editor is taking the footage and creating a virtual click per each cut ( stop and go ) on your video. There might a preferance you can shoose to avoid doing that and simply capture and present you with one single clip which you can then cut, trim, reassamble to your heart's content. I think the program you are using is targeted at the rank ammateur and so it is trying to make as " idiot proof " as possible. Since you are definitely not in that category I would reccomend somthing a bit more proffessional. Give Vegas 7 of earlier versions a try. There is not much you cannot accomplish with Vegas so give the trial a try and see what you think.