Finally I found the following article which resolves this issue. It appears there is a MicroSoft bug with this driver file, however Intervideo installs several DirectShow filters. So if you experience this crash with WMM, and have Intervideo products installed on your system so the following:
1. Go to your Intervideo Directory (C:/Program Files/Intervideo) Rename it to tempIntervideo.
2. Now launch WMM. It should start ok now.
3. Close WMM, and return the Intervideo directory stated in #1, and Rename it back to it's original name (remove the "temp").
4. Start WMM again. It should work ok now.
Above quote taken from Papa John.org.There's a component in Direct Show which caches the information about the effects and transitions that are registered upon your system. Unfortunately there's a bug in that component which causes it to crash if you have a lot of transitions and effects installed. MovieMaker calls this routine on startup which is why you're seeing MovieMaker crash.