ClubUgly--
Thanks for the help. We're running Lion, with the newest iMovie 11, 9.0.6, and are working out the kinks. I'll add a few clarifications to your advice for others. I've underlined my additions.
You have to delete or rename the old Event and Project folders. Creating a new set manually will not fix it. You have to let iMovie create the folders.
Here's the fix: Close Quicktime and iMovie first.
Goto Finder/Movies/iMovie Events
Goto Finder/Movies/iMovie Projects (there was no Event folder yet, as iMovie was brandnew download)
Rename to:
Finder/Movies/iMovie Events_bk
or, rename to Finder/Movies/iMovie Projects_bk
Next open iMovie, call the project Testing and navigate to File/Import/Movies and choose a random small or test movie. I downloaded a safe .mp4 from Apple. When done, next goto Finder/Movies/ and you should now see the new foldersiMovie Events created with subfolders iMovie Drop Box and Testing. Save, and quit iMovie.
Go back to Quicktime and open your movie you wish to Share. Now navigate in the menu bar to Share/iMovie and the error will be gone and you should now see a format screen. The message will say: Movie may be converted to a preferred format if the current movie format is not compatible.
Reopen iMovie, and a message will pop up saying you have a file waiting in iMovie Drop Box. I forgot the exact wording, but click ok. I had to quit and open iMovie again at some point before the file exported from Quicktime to the Drop Box folder and was recognized by iMovie, so you may need to open and quit iMovie again if the first time is not successful. The Drop Box folder will be automatically empty after you have shared it to iMovie successfully.
Now the dust is settled, close iMovie and goto your renamed folder and move it's contents to the appropriate folders in the new folders. Then send iMovie Projects_bk to the trash. You're all done 🙂
Thanks to ClubUgly for doing the legwork on this one.
--MCTV