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I just play the movie using WMP, pause at the point that I want to use for a thumb, then use my image editor to do a screen capture. Crop, edit, save, next...
You may have to go into your display setting and turn off hardware acceleration if you get a black screen when trying to capture.
There's probably a fancy program that will do the job, but I don't do enough thumbs from movie clips to bother with it.
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