If you've ever worked on a film of any sort you'll know it can be an emotional rollercoaster. When things go really well the buzz is like nothing else, but when they go wrong – the weather turning bad just when you need sunshine, a crew member or actor not showing or falling ill, permission given for filming at a key location unexpectedly being withdrawn – moods can change in an instant and good humour can all too easily give way to frayed tempers, which ultimately can leave friendships in tatters and even scupper careers. On a big Hollywood film, with its vast numbers of personnel, multi-million dollar budgets and potential organisational nightmares, the domino effect of even a minor disaster can be potentially catastrophic, affecting a far greater number of people and having an even more damaging effect on the production, those involved, and even the studio that funded it. It is for this reason that financial safeguards are built in to every major film endeavour, from production and completion insurance to flexibility in the shooting schedule and even the possibility of going a little over budget if problems do arise. But projects still collapse in mid-production, and potential money earners and award winners never see the light of day for a variety of reasons, most of which remain the subject of rumour and trade press speculation.

Since his days as animator and performer with the Monty Python team, Terry Gilliam has been responsible for a string of films characterised chiefly by the startling inventiveness of their visuals, themes and execution, from the brilliantly inventive take on George Orwell's 1984 that was Brazil, to the richly textured expansion of Chris Marker's extraordinary La Jetée that was Twelve Monkeys. Even when things didn't go well for the director – production problems on The Adventures of Baron Munchausen burned him for a number of years – the results were still intriguing, and critical sniffiness failed to stop his adaptation of Hunter S. Thompson's Fear and Loathing in Las Vegas from gaining cult status and a devoted following.

Don Quixote is a project that Gilliam has been trying to get off the ground in one form or another for about 15 years, and having finally raised the budget, selected his cast and crew and sorted his locations and shooting schedule, he began production on this long-cherished adaptation of Cervantes' classic, undaunted by the failure of film-makers as illustrious as Sergei Eisenstein and Orson Welles to bring the novel to the screen. On the shoot of Twelve Monkeys, Gilliam hired Keith Fulton and Louis Pepe, two budding young documentarians fresh out of film school, to shoot a 'making of' documentary that would have more depth and honesty than the standard electronic press kit. The result was The Hamster Factor, which proved to be a detailed and invaluable companion to the film itself and a wonderful insight into the working practices of one of cinema's most inventive minds. So much so, indeed, that Gilliam asked them to repeat the process on what had now become known as The Man Who Shot Don Quixote, recording in detail the production of what could prove to be one of the director's greatest ever works.

As just about anyone approaching this film must by now know (and if not, the film's advertising will make you very aware), things did not go to plan, but even this knowledge does not prepare you for just how many distasters struck this prestige production and how quickly it fell to pieces. To detail the individual catastrophes would detract from the effect that a first viewing will have on the even half-suspecting viewers. One of the remarkable aspects is that there is no sense of schadenfreude about what plays out – Gilliam comes across frm the start as a thoroughly likeable individual, a consummate professional who is chasing a dream and clearly has the skill and imagination to make it happen. He is also someone who obviously loves every aspect of the film-making process – he is having fun here. When things start to go awry we thus feel for him and for those around him, especially resourceful and long-suffering first assistant director Phil Patterson, who ends up taking more than his fair share of the blame for the film's collapse (something this documentary helps put to right).

If good reporting is being in the right place at the right time and realising it, then Fulton and Pepe certainly qualify here. Although they did not arrive on the film until late in the pre-production process, they were there for all of the subsequent key events and sometimes to a surprisingly intimate degree – there are times when you fully expect someone to turn to the camera and tell them to bugger off, but it never happens. (The film-makers themselves suggest in interviews contained on the disk that when things got too uncomfortable they would choose their moment to leave before being thrown out, making you wonder just how bad things got when they weren't there.)

Having cut the film down from something like 100 hours of video, Fulton and Pepe keep it moving at a brisk pace, yet still provide a great deal of detail on the origins and production of Gilliam's film, which are sometimes delivered in some splendid animated inserts, designed very much after Gilliam's own style. It is this, plus the tantalisingly short glimpses we see of completed footage, that makes us ache to see Gilliam complete The Man Who Shot Don Quixote. If that is a key achievement of Lost in La Mancha – many have had the same reaction, including potential investors – then it is but one of them. What Gilliam himself describes as the first 'un-making of' film is informative, gripping and ultimately sad look at big-budget filmmaking and the fragility of dreams and should be considered essential viewing for anyone with even a passing interest in the process of film production.

Classily designed and animated very much in the style of the film's own animated sequences, the menus have a wonderfully Gilliam-esque quality about them – on the Extras menu, a clapperboard even dances over and lops off Gilliam's head. This comic approach feels most appropriate once you've seen the film – though its collapse is in itself a tragedy, the methods by which it does so are sometimes absurd in the extreme, and it is this aspect that is reflected clearly here, the sound bites that accompany the visuals suggesting barely controlled hysteria.

Lost in La Mancha was shot on digital video at a ratio of 4:3, the original intention being to supply a companion piece to Gilliam's finished movie for television airing. Transferred to film and projected on a cinema screen, the image quality was surprisingly good, though did betray its video origin at times (notably camera moves and captions) and matted to 1.85:1 (at least in the cinema I saw it) the picture seemed cropped way too tight, actually losing heads in some medium and long shots. On disc the picture is presented in its correct 4:3 aspect ratio and feels much more comfortably framed. The video aesthetic works well here, as it is something we readily associate with fly-on-the-wall documentary, and is aided by a sharp transfer with a good contrast range, solid blacks and, when appropriate, accurate colour rendition. Compression artefacts are rarely evident. The animated sequences in particular look very good, and the motion glitches picked up in the transfer to 35mm film are pleasingly absent.

There is only one soundtrack option and that's Dolby 2.0, with live sound being essentially mono, music being the only time stereo is really detectable. This is wholly appropriate given the nature of the project and never feels like a compromise. The mix is for the most part very clear – when background noise defeats the film-makers, subtitles are used to clarify the dialogue, as they are for dialogue conducted in French or Spanish.

Though not wide ranging, the extras included here are very useful and watched consecutively would run for getting on for two hours. Given the nature of the film, a commentary might possibly have been useful (but could just as easily have fallen flat), but behind-the-scenes or 'making of' footage would have frankly been pointless, given that this is exactly what this film is.

Four interviews with the key protagonists are all interesting, but a slightly mixed bunch.

The best has to be Terry Gilliam himself in an interview conducted by critic and writer Mark Kermode and running a most respectable 32 minutes. Gilliam is open and honest about an experience that was clearly painful, but is also positive and upbeat about the future, for him and the film itself, which he remains determined to complete one day. Kermode is a good feed man and provokes some wonderfully animated responses from Gilliam; perhaps the most uplifting aspect is that Gilliam has emerged from the experience relatively unharmed, still charged with energy, still wildly imaginative and still in love with his cherished project.

The second interview, with Johnny Depp (conducted by Demetrios Matheou), runs for just under 20 minutes, but a good third of that is used up watching Depp trying to find the words to answer the questions. Whether or not he is uncomfortable with the interview process is uncertain – he comes across as far livelier and more communicative in the main feature. Though still of interest, it is nowhere near as enjoyable as the one with Gilliam.

Co-directors Keith Fulton (6:47) and Louis Pepe (7:49) are questioned separately about the film. Both are interesting interviewees and give some very useful background on the production, but the interviews are a little brief and it would have been very nice if they had both been given more time – they're good talkers and in the absence of a commentary track I'm sure a good half-hour or so could have been usefully spent here.

The Extra Scenes section is itself subdivided into three. The first contains nine deleted scenes (in 2 sets – this is starting to sound like a filing system from Gilliam's Brazil, but is actually very easy to follow), each with text introductions by the directors. These vary from one to four minutes in length and include two alternative opening sequences. The key reason given for cutting them is usually that they added more layers of doom to already dark scenes, something that is less evident when viewed in isolation like this. All are interesting additions and add to the movie itself.

The collection of Video Portraits of four of the main participants was a stylistic choice made then abandoned by the directors. They were originally to be introduced by a carefully composed, motion-free shot of them, with their name and title, laid over interview footage of them speaking, which these portraits would eventually cut/dissolve to. It's a technique that has been used a lot on TV that is already (thankfully) going out of fashion. Seen in isolation, these shots look particularly odd, and running for something like a minute a piece end up looking like components for an as-yet unrealised video installation work. The stylistic exception is the nicely bizarre shot of Gilliam as Quixote.

Sound Bites contains six sequences made up from unused interview footage, detailing various aspects of the conception, casting and even collapse of the project. Some material, particularly from Gilliam, is repeated elsewhere, but there's enough new stuff to make this an essential companion to the feature. The sequences run from two to eight minutes in length.

The Storyboards and Production Stills section is a decidedly mixed bag. The problem with presenting stills of carefully drawn artwork on 625 lines of video is that they almost always look degraded, but as a DVD extra there is too often a curious determination to diminish the quality further by not even using the available screen space, placing the artwork inside a smaller frame against an unnecessary graphic background. Such is the case here with Gilliam's storyboards for the opening of The Man Who Shot Don Quixote – fascinating material yes, but with four drawings per screen and each occupying considerably less than a quarter of 4:3 screen space even means that you have to press your nose against the TV to see any fine detail. Benjamin Fernandez's production designs and Gabriella Pescucci's costume designs are, however, given the full screen treatment and benefit from it. The film stills are large, include shots not seen in the final cut, but are only 10 in number.

Finally we have the inevitable theatrical trailer, but it's a good one, capturing well the tone of the film and presented in a sharp, non-anamorphic 16:9 transfer with good Dolby 2.0 sound.

Also included on the main menu are trailers for three other Optimum releases, Nick Broomfield's Biggie and Tupac and Kurt and Courtney and Fabián Bielinsky's Nine Queens. Though nothing to do with this film they are of interest, in part because they demonstrate how trailer makers in the US cope with the problem of marketing a documentary (cut it like a drama) and a foreign language film (don't include any dialogue, then the audience won't realise).

Lost in La Mancha is a must for anyone interested in the process of film-making and is a lesson in reality for film-school dreamers who think it's all going to be a breeze (we've all been there), as well as a reminder of the delicate fragility of the film-making process for those involved at any level in a business in which people regularly gamble millions, often with little idea how slim the chances are that something good, let alone great, will emerge from the other side. As a documentary it is far from exhaustive, but this is not a video text book on film production, and it captures with heartbreaking honesty the despair of having one's dreams shattered by fate. The DVD is on the whole a fine job, with a very good transfer and some nice extras, and comes highly recommended. To those who caught the film at the cinema I'd still recommend the DVD – surprisingly, the film plays just as well a second or third time, and the post-film interview with Gilliam is heartening in the light of what befell him.