If Movie Maker 2.1 wasn't successfully installed...
Don't try fixing it by installing the version 2.0 package over your SP2 files. Once you've moved to SP2, stay there and work with the MM2.1 version files.
Check the files in the working folder against the list above, and copy any needed ones from the i386 folder.
Dean Rowe, the developer lead in the Microsoft Movie Maker group, posted a blog entry on 1/18/05 about "What can I do if I upgrade to Windows XP SP2 and Windows Movie Maker 2.1 is not installed successfully?"
Registering DLLs
Sometimes the installation of SP2 doesn't effectively upgrade Movie Maker to version 2.1. If you need to tweak it yourself, here's some more info.
In addition to manually copying the needed files, you may need to register 5 of the DLLs. It can't hurt to re-register them even if they're already registered. There are a few more DLLs in the folder but they can't be manually registered.
Register one by using start > Run > copy/paste one of the entries below. Do them one at a time...
c:\windows\system32\regsvr32.exe c:\progra~1\moviem~1\wmm2ae.dll
c:\windows\system32\regsvr32.exe c:\progra~1\moviem~1\wmm2ext.dll
c:\windows\system32\regsvr32.exe c:\progra~1\moviem~1\wmm2filt.dll
c:\windows\system32\regsvr32.exe c:\progra~1\moviem~1\wmm2fxa.dll
c:\windows\system32\regsvr32.exe c:\progra~1\moviem~1\wmm2fxb.dll
When all the files are there and the DLL's registered, test Movie Maker 2.1. Here's some issues to check for, indicating one or more of the DLLs are not registered.
if wmm2filt.dll isn't registered - effects and transitions don't preview in the collections, but other things do. When previewing the timeline video and text don't show, but audio and music play. And when you try to save a movie as either a WMV or DV-AVI file type, you'll quickly get the error message about not being able to save it for any of various reasons (not including this one).
if wmm2fxa.dll isn't registered but wmm2filt.dll is... things in the collections preview, but previewing the timeline shows video that looks embossed, and you can't see titles... and the issues will cascade into saved movies.
if all 5 DLLs are not registered... MM2 opens and appears to be functional, but only 5 of the original effects appear in the collection (Blur, Grayscale, Mirror Horizontal, Pixelate, Slow Down - Half, Speed Up - Double) and they don't preview, transitions don't preview, clips of all kinds in your collections preview, the timeline of a project looks normal but when you preview it you hear audio and music, but don't see any pictures or video. The text wizard appears functional but you don't see any text previews and the text clips in the project don't preview.
These are all clues that you need to register the DLLs... until you get that positive feedback and MM2.1 works normally.