Video Blury When I put a large file in windows movie maker?

I made a minecraft video with the resolution 1080x720p. The file is an MP4 file with a size of 228MB. The video is 4 minutes long and when I put it in movie maker, it says that it's preparing files in the bottom left corner. After they were done preparing, I checked the video quality and my 720p video was a 480 video. I don't know what to do because before this video I edited another video which was 2 minutes long and it's size was 100MB and it didn't lose quality. If you can, I'd pick up a Pro version of Sony Vegas for all video editing. I bought 3 different pro versions on Craigslist between $20 to $45. You might look in an area near you. I'll give you a few links though.

http://sandiego.craigslist.org/csd/sop/5327488501.html
http://orangecounty.craigslist.org/sys/5320996857.html

You won't have the same issues with SVP.

You should also download the free audio/video codec pack being that all editors use whatever came equipped with your computer, which is limited.

Here's the direct site & don't worry when it also installs what comes with it, a free media player, the custom settings options are terrific.
http://www.codecguide.com/
It doesn't have that bait & switch thing where it installs junkware. Go to your control panel before doing anything first to set up a new system restore point, this way you can undo anything you might not like w like for any reason. :0)

I would also set up your computer so it works better regardless of which video editor you use being that they require all the resources of your computer for doing the renders.

VIRTUAL MEMORY SETTINGS

a) Change the virtual memory default settings to "Best Performance."

b) Customize the default settings in the "Performance Options" & manually reset them.

a
In Control Panel, type in "System" then select it.
On the left, select, "advanced system settings."
In the Advanced tab, under "Performance" select "settings."
Change it to "Adjust for best performance."
Don't close this yet.

b
Go to the advanced tab here in the Performance Options. Keep this open & go to your web browser to do a search, go to youtube.
Now type in the search "how to change my virtual memory settings in Windows 8" (or whatever version you have) & follow along to change the default settings to custom. When I did this, it helped a LOT.

I would also download the free converter. I had a HUGE render that was 4GB & after converting the mp4 to mp4 (works with WMV & all the other formats as well) it compressed the file size down all the way under 700mb. Www.freemake.com & after playing both the original & the converted clip back side by side, they looked the exact same in quality.

After installing the downloads, I'd restart your computer.

Try converting your mp4 to the WMV being that the "windows" movie maker works best with this format. Keep the conversion at the same size as the original.