How to transfer an iMovie library from one user(U1) on a mac to another user(U2) on the same mac?

You need permissions on the folder hierarchy you are trying to write to, not just the file.

Any admin can do this by manually adding ACLs [access control lists] - but you don't need to go to all that trouble for one simple file move…

• Login to account U1, copy the file to /Users/Shared/
  [if it's on the same volume, hold Opt as you drag it to force a copy rather than move]
• Login to account U2, move the file to its intended destination.
  [If it's on the same volume, just drag it, no keypress]