Hi
Sorry I didn't realize when I first answered that you were talking about a DVD movie project file, not just a DVD data disk.
If I understand correctly .Msdvd is a file format only readable by DVD Maker, and is a way of saving a project in progress not something that can be opened and played in a DVD player etc.
It is like an .Indd file that can be read only by Adobe Indesign but doesn't really contain any of the content, just tells the program where everything is so it can be exported as a PDF file, or in this case an .avi or .other video file.
I found messages like this when I looked up DVD Maker...
As far as being reliable...it stinks. There are at least 6 free DVD makers online that are better.
If you google Windows DVD Maker [Microsoft] you will find many, many complaints.
Other people seems to have no problems with it, so I guess about the only thing I could suggest is that you down load and install the latest version, I'd install it in a different location from the original instead of the default one, if it will let you do that, (so Windows sees it as a new program and doesn't pick up anything from the old install) and see if it works better.
Windows DVD Maker has been removed from Windows 8 and doesn't seem to have been updated in ages, so the latest version seems to be...
Link Removed
It might be better to upgrade to a more modern application to create your DVD projects.
I use Adobe Premier Elements myself, it's pretty cheap and produces professional looking results.
It is more complex then DVD Maker but it can do a lot more stuff.
There is a trial version that you can try out for free to see if it will run on your computer, and whether you like it or not.
http://www.adobe.com/cfusion/tdrc/index.cfm?product=premiere_elements&loc=us
Or see if you can do what you want in Windows Live Movie Maker...
http://windows.microsoft.com/en-us/windows-live/movie-maker
Mike
By the time I got done typing this there were 6 more entries. LOL