This is my comparison of Windows Movie Maker 2.6 against Windows Live Movie Maker.
Windows Movie Maker 2.6
Windows Movie Maker 2.6 has got the time line/story board for piecing together your movie of the original Windows XP Movie Maker. It has got the standard preview window of any video editing software, a drop down list with preview window for your A/V clips and gives you access to the built in transitions and video effects.
There is a task panel with sections for Capturing Video that is for importing your video clips, pictures or audio or music/Edit Movie with options to view you collections, view video effects, view transitions, making titles or credits and and to make an auto movie and Finishing Movie with options to save to computer or to send to a DV camera. Also it has the standard menu and shortcut bar.
Windows Live Movie Maker
Windows Live Movie Maker is a bare bones video editor compared to the old Movie Maker it just has a video preview window and a search panel for your videos and photos and has the new ribbon style menu bar at the top.
It has a selection of different transactions known as animations along with various video effects.
Windows Live Movie Maker is nowhere as powerful as Windows Movie Maker in Windows XP and I advise Windows 7 users to download Windows Movie Maker2.6 over Windows Live Movie Maker