The iLife installer wants to put all apps on the boot drive. My boot drive is full. This is how I put iMovie 4.0 on my iPod. I have a dual USB 600 MHz G3 iBook.
1. Use Onyx to allow Finder to see hidden files.
2. Browsed DVD and copied the iMovie package to my iPod.
3. Used Pacifist to extract iMovie app.
4. Ran iMovie 4.0. It showed my music, titles, etc.
I haven't used it much.