Hi Ian,
I don't think PowerDirector 5 supports MP4 files. This is from the PowerDirector 5 FAQ:
What file formats can be imported by PowerDirector?
• Video: .avi, .dat, .mpe, .mpg, .mpeg, DivX (requires codec),
.wmv
• Audio: .mp3, .wav, .wma, .asf
• Photo: .bmp, .gif, .jpe, .jpeg, .jpg, .png, .tif, .tiff
Looks like you'll need to upgrade to version 6 if you want to edit them in PowerDirector. (From the help file for version 6):
CyberLink PowerDirector supports the import of the following file
formats:
Image: JPEG, TIFF, BMP, GIF, PNG
Video: HD MPEG-2, DVR-MS, DV-AVI, DAT, MPEG-1, MPEG-2, VOB, VRO,
WMV, WMV-HD, MOV, MOD, DivX, MP4
Audio: MP3, WAV, WMA, ASF