1. Click the Final Cut Express menu and then System Settings.
2. If you are capturing from tape, go to File > Log and Capture. Click Now in the lower right of the window, and then press play on your camera / deck.
3. If you are capturing from a flash memory-based camera, click File > Log and Transfer. The clips will show up in the clip window. Select the ones you want and click Add Selection to Queue.
4. Drag the clip down onto the timeline from the clip bin.
5. To cut up the track, select the razor tool from the toolbox on the right.
6. Use the razor blade to chop up the video.
7. You can drag the clip onto the second video track to stack them. This is how you will create the picture-in-picture.
8. In the Canvas (located on the right to the top) click the little square button and select Image+Wireframe. This will allow you to select the video track and shrink it in the window.
9. Select, shrink, and move the stacked videos into position.