What type of disk and recording mode are you using in the camera? Page 23 of the manual says there are three disk types that can be used DVD-RAM, DVD-RW, DVD-R and two recording modes dependent on what disks are used DVD Video Recording format (VR Format), or DVD-Video format (Video format), and have you read about finalizing and unfinalizing certain disks?
I can save the contents of a disc via my recorder to my PC- is that using supplied software to capture the recording contents?
Have you tried putting a disk in your pc's dvd/cd tray, then right click it in My Computer and opening it to view its contents?
I don't think there's much free video editing software online which is easy to use, but plenty of free time limited trials of commercial video editing packages available, Arcsoft Showbiz, Sony Vegas, Pinnacle Studio etc..
Have a look online for free trials of some of these for example
If you had a higher version of Windows 7, Live Movie Maker should have accepted the mpeg2 format I think your camera produces.