Thanks Bill for clarifying that. For future reference, it's essential that you use iMovie for importing from the SD card (unless you do an archive - see my later comments). iMovie requires the full file structure from the camera. It will not be able to work from just the MTS clips.
If you don't wish to import to an Event straight away, you can use iMovie's "Archive All" function. You will see this item appear at the lower left of iMovie's import window. So, when the import window appears, choose Archive All rather then importing to an Event. This action will copy the full contents from the SD card to an archive folder. From here, you can later import the archive (or parts of it) to an Event. The archive will retain the full quality of the original camera clips.
Alternatively, you can copy the full camera contents (not just the MTS clips) to a folder of your choosing. You can then import to iMovie from that folder, using File>Import - Camera Archive.
You may still be able to use the MTS clips you've saved to the Desktop folder. I've not used this product, but my understanding is that ClipWrap is able to rewrap MTS files into QuickTime movies that can used in iMovie. Also, there are numerous other applications that will transcode MTS files to a format suitable for editing in iMovie - search on the Mac App Store or Google. So, all is not lost!
Find ClipWrap here: http://www.divergentmedia.com/clipwrap
John
