No the file is not "avi". AVI is just a container, a wrapper, that is commonly used for DV, Xvid, DivX, MOV, and even MPEG-4. Look at the second image you provided it states that it is a WMV9. Where ever the file came from used the Windows Media Video codec, but for some reason wrapped it in an AVI container. The main reason that WMM will accept it, is that it is a WMV file.
Where did the file come from, Internet download, DVR, camcorder? You might also check to see if you have
Windows Media 9 Encoder series installed.
There's not much difference between VS11.5+ and VS ProX2 in the file formats they can edit. So upgrading just for that reason probably will not accomplish much for you right now.
Loss of quality is going to be a problem for you anyway if you are intending on producing a DVD. The file will have to be converted to MPEG-2 for SD, or AVCHD/Blue-Ray or HDV for High-Def. The positive aspect is that you're starting with a High-Def video, so down-converting to Standard Def (SD), you will not loose much quality.