I'd just thought I'd let people know about this. I started AMV editing a few days ago and I encountered this problem.
If you are using Windows Movie Maker to do lip syncing, then you are going to need stills of the video being used (unless it's a rare case where the video is already lip-sync'd).
I highly suggest you don't use the Take Picture from Preview Function found in the "Tools" tab (I'm using Vista, XP may be different), because the images take are usually fuzzy and blurry.
Solution: Use VirtualDub (or VirtualDubMod, whichever you prefer) to take a snapshot of the frame you are currently on that isn't blurry or fuzzy!. To do this, open the video of your choice and go the part you wish to take a snapshot of and click on the "Video" tab and click "Snapshot source frame". I'm not sure what the difference is between the source frame and the output frame, but source frame sounds a lot more "higher quality" as it is being taken straight from the video.
I hope some people have found this to be useful!