General Thoughts:

Actually a JPEG file is compressed (if you open a JPEG in Photoshop you can see the actual amount the file size would be without the compression). Mathematical algorithms are used to reduce the amount of info required to display the image and this results in smaller file sizes. It takes away information from the image but is designed to take away information that is not noticable to the average human eye. If you use extreme compression, or recompress a JPEG over and over you will see quality loss.

Video editing programs sometimes have their own compression schemes (like Avid). Sometimes they use what's availabe to them via your system (like QuickTime).

The way your editing program handles imported media is usually controllable through your settings.

Your editing program may use a different codec from what you used in creating the AVI - that has a direct bearing on file size.

Obviously I can't address your specific program. I don't know what it is and even if I did, my knowledge of Windows-based video editing software is limited. But hopefully at least I've given some baseline understanding of some of the relevant factors.

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