The default compression choices in Microsoft’s Movie Maker are rather slim, but fortunately it’s possible to add your own compression profiles. To create custom profiles, first install the latest Windows Media Encoder 9. This also installs a tool called Windows Media Profile Editor. Use it to create or edit profiles.
In order for your custom profiles to show up in Movie Maker, save them into C:\Program Files\Movie Maker\Shared\Profiles. Note that in Vista you’ll require elevation to write in that folder. It’s easier to edit that folder’s security setting first, to allow a non-elevated user account to write/modify files there. After you restart Movie Maker, your new profiles will show up when you publish for “playback on this PC.”