Why won't it let me take this in?
Because multiplexed files like MPEG-1, MPEG-2, VOB, Flash, etc. employ a somewhat different form of technology. They are essentially a single stream of data in which the various components are spatially synchronized by placing them in interspersed physical blocks of data while QT content normally consists of parallel tracks of data which are temporally synchronized to a common arbitrary unit of time.
I thought mpegs were fairly common and quicktime has no problem opening it.
MPG (i.e., muxed MPEG-1) files are "Playback Only" supported by QT. That means the files can be played (assuming they are properly terminated and have no "timecode breaks") in QT but cannot be edited nor converted (without loss of audio) by QT applications. "Muxed" MPEG files (usually MPEG-2 video multiplexed with MP2 audio), VOB files (usually MPEG-2 video multiplexed with AC3 or PCM audio), and M2V (MPEG-2 video)/AIFF (Linear PCM audio) paired elementary data streams are normally not supported at all unless the user has purchased and installed the QT MPEG-2 Playback component. And even then AC3 audio is not "natively" QT supported as a "muxed" option. Thus, while MPEG-1 and MPEG2 files are fairly common, they are not a normal based on QT technology as embedded in the QT core structure.
Am I using the wrong program? Do I need to go back onto my ancient Toshiba and use Windows Movie Maker just to resize a video?
That would likely depend on what you mean by "resize a video." QT Pro will allow you to re-scale the dimensions of either an MPEG-1 or MPEG-2 file without having to re-compress the file. The normal QT Player will allow you to temporarily change the display size of a playing MPEG-1 or MPEG-2 file but not save these changes. On the other hand, if by "resize" you are referring to the storage size of the file, then you would need an MPEG-based, third party application in order to re-compress the file to either a different compression format or the same compression format but using a lesser data rate. Since iMovie '08 is an editing application and MPEG-1/2 file are not editable in it, then "Yes", you are using the wrong application.