It means that Movie Factory is confused!
I imported files from another DVD that was burned for me,
If that's a "regular" video-DVD (that plays in a DVD player), then we know the format is DVD-compatible, but the MPEG is probably corrupted.

The DVD could be damaged, or it could be getting corrupted during editing/processing. (A corrupt file can sometimes play OK).
Are you trying to make a direct copy of the DVD, or are you editing it? You should be able to copy the DVD without "importing" it. But, I don't know if MF2 can do that.
If you are editing the video (cutting, splicing, transitions), the editing process could be corrupting the MPEG. You can try making an un-edited version to prove that one way or the other. If it turns-out that the editing is causing the problem, I can recommend a special-purpose MPEG editor.
You might download the free trial version of Movie Factory 5. It has a much improved DVD-import feature. And, it may just work better for you.