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I have been having major problems too. The BGM thing works, but it is totally lame that it loads in a new window. That's not going to work for me. I am going to try WAV and other file types, but will try to download movie maker because that didn't come with my windows. This has been going on for days and is driving me crazy.
I have tried to do everything and have saved with multiple codecs to no avail. I officially give up for now. I'll just change panoramas or pictures and wait one frame in between all of them or something. AAAAAAHHHHHHHHH!!!!!!!!