It's certainly way better that my first AMV!! ;P It's cute.
It's true there are some parts that just "sit there" as you said that could have been cut more/sooner. It's a super hard thing about AMVs when you want to continue the scene because you like it or it seems to almost fit perfectly and you just don't want to cut it, but you should! I always had this problem (and sometimes even still do), but as you edit more videos you'll gain a better idea of where and what to cut in order to sync it up to the music, mood, lyrics, etc. But really you did a pretty good job with this, the anime looks interesting and I'm almost tempted to go watch it now!
Also agreed on the lip flap, and I would suggest making all the clips in your next video one size instead of jumping between wide/fullscreen/letterbox, etc. Oh and if you're unhappy with Windows Movie Maker (I can see why you may be, that thing put me thru hell for like a year o_O) and want to try something new with more options you can look into Sony Vegas or Premiere.
Good luck on your next one! xD