If you have the emulator colors coming out in red instead of orange, I have the solution to bypass that.
First, go to tools.
Then you click on Options.
Then click on the 'Compatibility' tab in options.
Then scroll down until you find something that says: ffdshow Video Decoder.
Then if it isn't checked, place a check by it, and then your recorded emulators will come out with the orange background after you publish the movie instead of the red background.
*PLEASE NOTE*I'm not sure about XP, but this is only confirmed to work in Vista's Movie Maker.
Thanks!!
-Chris