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Try this: Rename the myvideo.mpg to booby.mpg. Import it to the Media room of the library. Click and drag the booby.mpg to the timeline over the myvideo.m4v clip and release. Select Replace. That should do it.
Thanks for the suggestion. However, it wouldn't work in my situation because I had trimmed the original video clip. I did find however, that if I removed the original clip with the option to leave a gap and then inserted the new clip using the trim to fit option, I could then retrim the new clip using the in and out position I had previously noted down. Unfortunately and for some unknown reason, PowerDirector 18 does not play any sound associated with the new clip. I can play the clip using VLC Media Player and also play it in AVS Video Editor, so I don't know why it won't play in PowerDirector.