Microsoft Expression Encoder

Expression Encoder imports and encodes video files, produces live webcasts, enhances media with watermarks and advertising, and publishes with Silverlight.

• encode high quality videos for devices and the web
• Silverlight video experiences with customizable templates
• capture your PC’s screen actions for training and demos
• prepare video with simple edits and overlays

Expression Encoder is targeted at web developers who want to "publish rich media experiences with Microsoft Silverlight", but in reality this is an excellent tool for anyone who wants to play around with video.

Essentially, it's a grown-up version of Media Encoder: you can import clips, carry out basic cut editing, crop or deinterlace them, add visual or audio overlays and then encode the finished results to WMV files with complete control over all the video settings (bit rate, size, aspect ratio, encoding method and more).

Extras include a powerful screen capture tool that will record whatever's going on in the window or region you specify. There are a few limitations with this free version, but it's still a capable program in its own right, and one that will never time out. It's well worth a look.