Hello, and Welcome to ItsAllPC!
Yes it is very possible. There are a number of methods you can take to do this. First, you have to have the appropriate hardware. That is, you need some sort of a TV Tuner (also known as a capture card). These come in several forms on USB or PCI Cards. First you need to buy one. I'm not going to recommend one because I have little experience with TV tuner cards in terms of quality, price, and availability.
Here's a shot of two internal PCI TV tuners:
Here's a shot of a USB TV Tuner with a remote:
Once you install and configure the TV tuner, you can connect a VCR to it. All you need to do is play the VHS while the computer records it. In Windows Movie Maker, you can do this by using the Capture Video wizard under the File Menu. Or the keyboard shortcut is Ctrl-R.
The Windows Movie Maker (WMM) help has surprisingly detailed instructions on how to set all that up.
An alternative method is to use WMM to import some already recorded video instead. You can use the software that comes with your TV Tuner to record the VHS to a file. Then have WMM import it and split it into clips.