Hi Dutch Rose.
Don't know if you are still interested in this problem, but I have experienced the same thing.
My setup is as follows: Windows 10, Movie Maker Version 2012 build 16.4.3528.0331.
I have loaded a few clips taken with my smart phone in .MP4 Video File format. Movie Maker previews them just fine. I can trim and save the clips as a movie no problem.
I am able to stabilize the clips and the preview looks good. However, when I try to save the stabilized clips as a movie I get the error message as you discribe.
The stabilization feature offers three options:
- anti-shake
- antil-shake with wobble correction - low
- anti-shake with wobble correction high
I have found that, for me at least, I am able to bypass the error if I use option 2 (anti-shake with wobble correction - low). I have not tried Option 3.
With Option 2 I am able to save the stabilized movie without error! Hope this works for your too.