Thanks for your reply.
I'm sorry I used the rather vague expression "gets confused". What I meant was that the camera thinks that there is more video footage to come (because it's taking the duration from the THM file) but finds that it has reached the end of the video data in the AVI file.
I shall try to describe in more detail if movie #2 ( the one from which we have borrowed the THM file) is longer than movie #1 (the one whose THM file we have lost.)
When we turn the camera on and go into Browse mode the correct full-screen thumbnail is displayed. If we zoom out the incorrect small thumbnail (i.e. the thumbnail borrowed from video #2) is displayed.
When we play the video it plays correctly, but as soon as it reaches the end the display changes to show a small incorrect thumbnail (relating to video #2) in the centre of the screen with the words "Unidentified Image" underneath.
Originally I thought we had to turn the camera off and and on again to recover from this situation, but I now find that toggling to the thumbnail of the next or previous video, then back again, returns us to a full-screen display of the correct thumbnail.
From Browse mode we can go into Edit mode successfully, but as soon as we try to move to "Cut End" the display changes to show a small thumbnail of video #2 with "Unidentified Image" underneath.
In conclusion, the technique of borrowing the THM file from a longer video works up to a point, but results in the display of incorrect thumbnails, the inability to edit and the display of an error message when we play to the end of the video.
If there were a way of recreating a THM file that correctly matched the thumbnail(s) and duration of a video it would avoid these problems. It would be even better if a THM file could be created for an AVI file such as an edited video, since the edited video could then be displayed on the camera.