I think you can use Format Factory. it has the option to cut/edit/add/merge videos.
OK, tht means, you have to record / take screen shots of the desktop monitor. You can use HandyCam (or maybe HyperCam) I do not know the actual name..
---------- Post added at 01:22 PM ---------- Previous post was at 01:22 PM ----------
Checked it.. it is hyper cam not handy cam..
Yes, format factory is able to do exactly which you wish to do
Yes, you can even crop the video. It is their in the right side of the window, from where you are able to cut the video. Also, I think this has been added in the version 2.30