Hi...I'm hoping to find some guidance here...I'm overwhelmed with the information because I don't really know the lingo. Perhaps you could help me out -

I have pre-ordered a Sony DCR-SR42 30GB camera that will arrive in a month. I run Windows XP.

Ultimately, I would like to make a documentary style video (about a local horse auction where cameras are not allowed - stills and footage will be taken illegally from my camera as well as some nany cam-type equipment) - I would like to use both stills and video, with music and narration. This will not be a fancy "production" - I will be exposing the conditions and treatment there.

I haven't got a CLUE which software to buy that will produce what I am envisioning. Of course I'd love to go whole-hog, but I must buy what is financially feasible.

My specific questions:

1. Is there a low priced program (under $250) that will allow me to layer both music and narration tracks?

2. I want quality audio for the narration...will this be possible on my budget?

3. Is there a program that has both the video editing AND audio recording capabilities in the same software? If so...

4. What type of mic will best suit my needs?

I hope these questions aren't bothersome. I am simply overwhelmed with everything that is available. I found the Matrox bundle which will probably suit every need...but...I can't afford that bundle.
I'm considering Adobe Premiere pro - right at $250 but not sure what else I will need to also purchase for the audio recordings.

Thanks for any help or advice you may have.

Tracy