If the mutes are really "bleeps* then the audio transitions wouldn’t matter. The advice here is good; WMM and the segment technique should do everything you need.
ETA: But a good editor would let you replace names and other nouns with “rutabaga,” which would be good for entertainment purposes. 
As a professional editor I tend to agree with the note Amateur Barbarian is sounding (but he’s being a lot more subdued about some things than I would be --I’m just not that good at diplomacy sometimes :o).
People not accustomed to needing video pieces often don’t appreciate that they need a higher-quality video than they thought. And I’m not talking about “broadcast quality” here, I just mean “barely passable amateur quality” as opposed to the “absolutely unusable FUBAR” quality the client thought would be acceptable.
If I’m understanding correctly, the OP wants to essentially “bleep” out (or in this case, mute out) certain names and places for privacy. I’m not sure how simple this would be with Windows Movie Maker. I actually tried to use WMM a few times and it was a total nightmare. True, part of the reason it seemed that way was because I’m used to editing on a professional system (Avid Media Composer). On the other hand, I wasn’t trying to do anything but the must basic “cuts-only” editing with a single audio track and it was still impossible to produce anything usable.
I don’t recall being able to move about in the WMM timeline easily and granularly enough to make the in and out points with the accuracy that the OP would need. “Bleeping out” a word or two has to be done extremely accurately lest you cut off some of the audio that precedes or follows it.
I’m not very familiar with Adobe Premiere–I’ve never used it. But I do know that it is professional-level editing software and other editors I know swear by it. And if the difference between Adobe Photoshop (standard) and Photoshop Elements is any indication, the Elements version of Adobe Premiere would be more than capable of doing the fine audio edits the OP is looking for. Well worth the $100 in my estimation. It would also add tremendous ease to changing around any video, too.
The only problem is that the OP wants to finish this by Friday. Editing-wise, I could probably figure out Premiere Elements in a few hours. But sometimes the settings needed just to get the media into and out of your computer can take a little while longer to get just right.
Afraid I can’t say what the solution is for the OP. Personally, if I was in his/her shoes I would buy Premiere Elements but the amount of time available to finish the project would decide whether that solution would be possible.
Hmmm… I wanted to add that I reread the OP’s info and noticed this was for a focus group. If by “focus group” you mean some “people in your basement casually watching a video” than maybe, maybe, you can get WMM to work OK for you.
If, OTOH, this is a professional focus group setting than I would think that a certain level of professional video-editing would be called for and WMM wouldn’t be up to the task, IMO.
ILMV1, I’m usually regarded as being the undiplomatic one, so I am surprised you think I was soft-pedaling my comments. 
I have learned that it’s of little use to suggest professional approaches to novices or amateurs; youse and mees might think they’re simple and “the only right way” but for someone who is tentatively poking at an entry-level tool, they’re probably as esoteric and complicated-sounding as tensor calculus.
I will concur (and already partly said) that most novices greatly underestimate what goes into a finished communications project - be it a sell sheet, poster, product web page, video, what have you. It looks so easy and simple that it must be that easy and simple - a Flip camera or cel phone video, the software that came with it, an hour, and voila, something that would pass on television. Things like the finding the golden moment of edits and the varying audio background are just two of a thousand details that go into a polished video - not to mention “all the quality in video and audio recording you can lay your hands on” as a starting point.
But most novices won’t believe any of that until a project failure bashes them over the head. So I was trying to soft-pedal the notion that the task might be just a bit bigger and have more aspects than proposed.
Good cop, bad cop dontchaknow…
Very minor update. I’ve done a few in WMM, and while the mechanics of splitting/muting work OK, I’m not thrilled with the transition in and out of the muted portions. I’m in the process of downloading a trial of Adobe Premiere just to see how quickly I can pick up performing the same function, and if I’m any happier with the process.
Again, I really appreciate all of the feedback here. And feel free to keep throwing more my way.
OK! If you can get Premiere up and running I suggest instead of muting the parts you want remove you add a sound there. Like a “beep” (which is usually 1000 KHz tone – I think) or some other innocuous background sound. That should help with the funniness of the sudden silences you hear now.
And it depends on how the long the excised parts are. If only the length of a name–about 15 frames or half a second–than just replacing the name with a beep or whatever should work. If , however, you are excising parts that are 2 or 3 seconds long you might want to do a quick sound fade on the front and back ends of the excised part. Say a 2-4 frame duration of the fade.
A lot of that depends on the loudness of the ambient noise behind the dialogue.
If the ambient noise is particularly loud you may want to make up a bed consisting of “wild sound”, or, the room noise when no one is speaking. This can help level out the audio inconsistencies during the audio edits.
But I don’t know how experienced you are with editing. What I’m suggesting is starting to get into some semi-advanced audio editing techniques and can go sideways on you if you aren’t used to doing that sort of thing.
If you need any help with getting Premiere set up and running or any other part of your edit, ask here. I will try to watch this thread to see if I can help but Im kinda busy the next few days. Maybe Amateur Barbarian and others can help too.
Good luck!
Asmovian– are you downloading a trial of Premiere? Or Premiere Elements? I’m not totally sure but, Elements might be easier to run if you’re not used to editing that much.
Asmovian– I just downloaded the Premiere (standard) trial. Partly so I could help you with it if you need it, but also because I really need to learn it because you never know what editing system you’ll be asked to work on in some in-house situations.
I did a quick sample video. I had no problem stringing some clips together and exporting them to a master MPEG 4 video file. The one thing I haven’t had a chance to look at closer is one of the very things you’re working with: Changing the levels on audio clips and transitioning (fading) into and out of them. Hopefully I’ll get a chance later tonight to play with that.
After playing with it for 20 minutes, I must say I found the program very easy and intuitive to work with.
What I had downloaded was a trial of Premiere Pro CC, but I have been unable to import the video file. I keep getting an error message.
I definitely appreciate you trying to work alongside me.
What did the error message say?
What type of file is the video? Do you know how many frames per second it is (e.g. 24 fps or 30 fps)? What the resolution is (for example: 720 x 480)?
You might try just clicking and dragging the icon of the video clip from your desktop to the left of the two video windows in Premiere.
The error depends on how I try to import the file. When I initially tried to import the .avi file, I get “Unsupported format or damaged file.” This is the file in its original format, which worked fine in WMM.
When I then exported the WMM project to an .MP4 and import it, I get “The importer reported a generic error.” It is the same whether I drag the file over or use the Import command.
I think that, in the interest of time management, I’m going to have to go back to WMM.
I suppose so.
I’m surprised it wouldn’t take the MP4. That was the format I had no trouble importing. It’s too bad you don’t have time to get it running… I think just a tweak or two to the import settings would get it working but you need to do what you need to do to get the thing done.
The assistance remains very much appreciated nevertheless. Thank you!
You may not have time to check this out but I think the problem may be a wonky codec that Premiere can’t identify. I found this help page that I think shows the way, probably, toward working the problem out.
A key here is to open your file with Quicktime so you can get the codec information and find out whether it will work with Premiere. If it isn’t on the computer running Premiere, some codecs won’t work. The solution (which follows the above quoted info on the linked webpage) is to download the codec that’s needed or delete a conflicting codec that’s causing the problem