By the time

To me, it's a matter of timing. If the first frames, words, etc. were just coming on the screen as you walked in, I'd say "was starting" is correct/accurate. However, if content had been on the screen for 20 or 30 seconds, then I believe "had started" would be more accurate.

Whether you use "when" or "by the time" is to me, a matter of preference. I've used both, but I believe "when" would be more "acceptable" to a greater number of critics.

Change of subject: the use of "what makes" rather than "that makes" in the last sentence is for me, a faux pas.

Thanks so much

Keep in mind that "always" in front of a verb requires the verb's -ing form.

As GeneBurnsUSA said, it is also a matter of timing.

"By the time" usually implies that the action in the second half of the sentence has already started in the past. Here are a few natural-sounding examples:
"By the time the ambulance arrived, it was too late (he was dead)"
"By the time we arrived, the music had stopped"
"By the time I woke up, she was already cooking"

In your specific example:
"When we arrived, the film was starting" would sound best, if the film is indeed starting at the moment you enter the cinema.
"By the time we arrived, the film had started" would sound best, if the film started before you entered the cinema.

"By the time we arrived, the film was already starting" would indeed also sound OK, but do note the difference - "already" ;-)

I like "had started" much better. Sleeping is an activity that continues over time so in that case either form works. But "starting" happens and then is over.

I think there is a period of some minutes where you can say the film was starting. The thing is, you are probably trying to convey that you are in the unenvious position of rushing to your seat so as not to cause others inconvenience. You're a bit late to the theater in other words. Or you might express yourself in this way because you are rushing to be seated and situated so that you don't miss the very beginning and the overall ambiance of the movie. I don't think we have to get some timer out and firmly state that you can only say was starting within 20 seconds of some almost arbitrary point at the beginning of a film. As we all know so many films of yesteryear and of contemporary film have a lot of fluff at the beginning. There is pomp and circumstance. Planes flying around towers in RKO films. And nowadays there are about 20 different production companies that have to be acknowledged.

I would reserve the use of the phrase had started only if actual scenes in the movie had begun and you might have missed some of them. Say for example you come into the theater and you see what might be an establishing shot for a scene and might be in fact the very first shot of the film, but since it's already on the screen you can't even tell if it's the start or if you might have missed something before it. That is what I would think you meant if you told me the film had started. You came into the theater and saw a scene and maybe even people speaking.

I think either would be okay, grammatically. As others have said, in this case "was starting" might be more specific and therefore informative, if in fact the film was just beginning. Saying "had started" is more ambiguous about how long it had been running. If it had been going for, say, half an hour, you probably wouldn't say it was starting, but might still say it had started.

it's a matter of timing.
We always work for a better tomorrow,
But when tomorrow comes.
Instead of enjoying
We again think of a better tomorrow..!
Let's have a better today !!

I think the amount of time gap between the two actions will dispose us to the use of the tense whatever best fits there . If the gap in the time is considerably of long duration , we tend to use past perfect tense and if the two actions are simultaneous or near simultaneous , we would find it too formal to use the perfect tense and thus we would go in for the progressive tense .

I think its a matter of time. Had started is correct for that sentence however was sleeping is correct for the second sentence as sleeping is an activity for time little bit longer.