Whatever version Windows Vista has is definitely better than WMM 2.6 that Microsoft has on their site somewhere
Less effects and transitions and it keeps breaking the size of videos and making them much smaller, unless that's a problem with Windows 7's non-existing compatibility with that version
Anyway, i'm currently using the trial of Camtasia which can have layers for audio and video but i don't think it has a wide variety of effects and such
There's also Video Pad, but i haven't really used that much and adjusting the positioning of audio in the timeline is super confusing when you've got clips that are shorter than others