There are actually several methods, I perfer this way:

1. Drag the source file or files to the timeline.

2. Zoom in (use the up arrow on your keyboard) so you can see more of the frames. Usually three/four clicks works well for me. You can always reverse the process a step at a time using the down arrow.

3. Play the video and be prepared to stop it roughly where you want to make the first cut. You don't have to be exact at this point, error on stopping a tad early for the start point and a tad late for the end point for each cut which you can trim latter.

4.Click on the frame you think you want the cut to start and you'll see a white a vertical line over the timeline.

5. Use either the left or right arrow to move backwards or forwards. Now you see the advantage of zooming in first. The more you zoom in the more accurate your cut will be.

6. Now click on any frame to move the vertical line backwards or forwards to mark you starting point of your cut. While the vertical line remains white and flashing, click EDIT on the tool bar then select SPLIT EVENT. This isn't absolutely necessary, but I find it useful since we're going to break the source video into several chunks to make it easier to work with. You'll see that VF adds a FX button on the very last frame of each section.

7. Click on the split section on the right and drag it a little to the right to get some blank space by holding down your left mouse button and just dragging to the right.

8. Click near the beginning of this moved section. Now using the left and right arrow keys on your keyboard move it on the timeline to more precisely get the starting point. Another advantage of having blank space, you'll know you went too far left because you'll see just a black frame in the preview window. Nudge it right by using the right arrow key on your keyboard.

9. Click on play and stop when you get to the end of the portion you want to cut or a just a tad beyond. You can also click on the vertical line at the start of the cut you're making and while holding down your left mouse button drag slowly right (above the video frame)watching the preview window. Let go when you reach your wanted end point.

10. Video Factory will draw a gray bar spanning the area you highlighed. Treak the range if necessary. When you're happy with the range you have again clink on the last frame you want in this cut then again click EDIT on the Tool Bar and again click split event, then drag the remaining video right again to create some blank space. The area you want as a "cut" should now have blank space at the front and end of selected frames. Click at the start of your cut, then while holding down your left mouse drag right to include up to the last frame of your cut area.

11. Click on the make a movie wizard and select write movie to file or disk. Select the format and template you want.

12. Check render loop region only. This will only render the area you selected in the previous steps.

13. Change the file name from untitled to file-a, click next and wait for the loop area to render.

14. Repeat for each of the areas you want to cut naming each additional "cut" file you make file-b, file-c and so on.

15. Once done clear the timeline or shut down.

16. Start up VF again and load each of your parts you made in the previous steps if you plan on joining the cut sections dragging each in turn to the timeline applying cross fades, transitions, etc.

It seems like a lot of extra work this way, but you keep very tight control and the doing is much simple then the explaining once you do it a few times. If you make a mistake no harm, since the source file is never touched.