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According to a muslim friend, there are 2 types of jihad. One is the 'big' or 'greater' jihad which is the inner struggle against evil, temptation, etc, to stay closer to God. That is the more important of the two.
The second, is the 'small' or 'lesser' jihad which is the outward or physical struggle, and can include many types of physical struggles most very benign, though it is the one people always think of when they think of jihad. This lesser jihad is not as important. It is most important to adhere to and practice the greater jihad.

Well, I am not an expert on the religion of Islam in general. I am an "armchair researcher" on the slice of Muslim doctrine regarding the Last Days, just from studying this topic after 9/11. But I'll answer as best I can.

By one classification of ordinary, "mainstream" Islam, there are four levels of jihad: an-nafs (against oneself) / ash-shaitan (against Satan) / al-kuffar wal-munafiqeen (against infidels and faithless Muslims) / and ahlu ath-thulm wal-bida'ah wal-munkaraat (against injustice, innovation, and public sinning). The opposition may take place within one's heart, by words, or by actions, including warfare.

For the ordinary, non-terrorist Muslim, that sort of definition is sufficient, and he lives his spiritual life according to it.

But for the terrorists and their sympathizers, they formulate rationales justifying all manner of violence against non-Muslims -- and frankly, it is not hard to find verses in the Qur'an and ahadith backing up their interpretation.

Muhammed 'Abd-al-Salam Faraj, one of the assassins of Anwar Sadat, wrote a booklet called "The Neglected Duty" which has had tremendous influence on Islamic terrorism since the early 1980s. The "neglected" duty is jihad, Faraj says: jihad is demanded by the Qur'an but most Muslims blithely go about their day going to work and raising their kids.

Faraj goes on to "explain" how jihad is not merely the inner struggle against worldly temptation, but must also be understood as the killing of infidels and moderate Muslims. Muslims who neglect this type of jihad, he says, are no better than infidels, since they allow the infidels to flourish. He justifies all sorts of actions against anybody in his way. Faraj's booklet has been published and republished again and again throughout the Muslim world.

One scholar, Johannes Jansen, published an English translation and commentary in 1986, but Macmillan stupidly has let it go out of print and remains so to this day. If your library has a copy, definitely read it. If you know anyone at Macmillan, ask them to get it in the bookstores again.

"Muslims generally classify jihad into two forms,jihad al-akbar, the greater jihad, is said to be the struggle against one's soul (nafs), while jihad al-asgar, the lesser jihad, is external and is in reference to physical effort and/or fighting ."

I got this from wikipedia. http://en.wikipedia.org/wiki/Jihad
I have to say they have a very interesting and informative discussion about jihad.
It seems that what my friend told me, is the layperson's general concept.

There are muslim scholars and clerics who seem to subdivide the above 2 jihads and some into 10 or more types of jihad. There's also a discussion of the different interpretations of jihad within the different sects.

It's a much more complicated religion with different doctrines and sects than most people understand. Most people group muslims under one umbrella, though I don't know why, since they understand that there are different doctrines and sects within christianity with their own interpretations of passages within the Bible.

I guess if most muslims see jihad as my friend does, where the most important is the internal struggle, we don't have much of a problem. It's when they see jihad al-asgar as the greater jihad, and interpret it and stress it as the jihad by the sword (jihad bis saif) as the terrorists and radicals do, that we have dangerous conditions.

About the Faraj booklet. Maybe it is best that it's out of print. Although I can understand on a research/ educational level why you might want to read it, it sounds like terrorist propaganda, and we don't need any more of that.
Similarly, I have uncomfortable feelings and reservations about the film you ask about here. It also sounds like propaganda, though from the opposite extreme. I don't think it's a good idea to have the world see all muslims as their enemy. (which seems to be the message of this film. I'm guessing)
There are 1.3 billion muslims, and obviously most just go about their lives trying to provide for themselves and their families.
Having the non-muslims of the world turn against all muslims and the religion altogether, seems like a kind of self-fulfilling prophecy to me. It's what the terrorists and people of the ilk of Iran's new president want.

Maybe this movie was made for just that purpose?
Be ever vigilant...