Just to expand on what QPdad has said ..
You can use windows movie maker to edit, cut and save your video as WMV. If you don't already have Windows Movie Maker you can get the download by running the Windows Updates and it will come up as an option to download. (I think it was part of the SP2 update)
Microsoft Updates Once you have Windows Movie Maker and your video clip is already uploaded to your computer, you open the program and click import movie. You then find your file and bring it into Windows Movie Maker.
Once the file is imported you can drag it to the storyboard at the bottom of the screen. Once you have completed your editing ...
Click File, then click Save Movie File, Choose first option "My Computer" .. following this process will automatically save as WMV...
Also in this process when you get to the screen "Movie Setting", you can click on "Show More Choices" .. You can then click on the radio button "Best Fit to File Size" .. The program will automatically insert the size of your file .. if it's greater then 2mb you can type in 2mb to force it to condense the file. Keep in mind that if your file is quite a bit larger then 2mb and you change it you will loose video quality... the audio however should be ok...