Hi8 to PC quality / process

27GB is a real big file...
Maybe you should have better captured it in some smaller chunks. Nevertheless, MovieMaker should in principle be able to work with this size files, so I can't say what is going on.
But what is more important: in total you have 35 GB which is almost 3 hours. You can cram them on a signle 4.7GB DVD, but only at very low quality. On a single DVD you can burn: 1 hour of very good, 1.5 hour of good quality, 2 hours of moderate quality.

When you did this:

the quality of your DVD realy must be crap...