I'm only working on my first pot of coffee, so cut me some slack if I'm missing something but -
"screen captures"? You mean still images off of a computer screen? Or maybe capturing video off of a TV or something? (What exactly do you mean by "screen captures"?)
You don't actually "compress two hours of video to eight minutes". You compress files sizes or reduce bandwidth, but that doesn't shorten viewing time. Oh, I guess you could use the term 'compress', as in "time-compression", but it's not technically correct, computer-term-wise, at least not in my experience.
Whatever. At any rate, your wmv is definitely compressed already and can't be re-edited and re-rendered without losing significant quality. Your avi is most likely uncompressed or at least not using "lossy" compression and is the file you should work with. I'd have to have a better understanding of what's going on to offer any advice though (and maybe another cup of coffee).