ZM is not able to capture from video files.
The file method is just for jpegs as an alternative for cams that for what ever reason ZM can not retrieve an image from directly.
Not sure what you're trying to accomplish, but if it would be helpful, it looks like Mplayer can save JPGs out of movie files, which you could then theoretically feed to ZM's file feature. Haven't tried it, but looks feasible.