Fresh from the latest round of legal jousting, Terry Gilliam, rode into Karlovy Vary this week to screen “The Man Who Killed Don Quixote” at the Czech film festival, determined to see his fantasy continue its globe-trotting tour after completing the film nearly 20 years after its first location shoot in Spain. But the jovial 77-year-old told Variety he is no knight errant – just a grown version of the giggling kid at the back of the class.

What would you like to be remembered for?

When I was in the States promoting “Brazil,” I went to Texas. I went on this radio show and this guy phoned in. ‘Hey, Mr. Gilliam – wonderful film. I giggled in awe.’ I want this to be put on my tomb. The giggles in school were always sitting at the back of the class.

For a director with so much attention to scene design, you’re quite open to changes on set in performances, I understand.

We sit down, we write things but when we are shooting and we have good actors, we came up with different ideas and ways to do it. Let’s go! In “Quixote,” Jonathan Pryce, who wanted to do the part for 15 years, for a first few days he was ad-libbing so much stuff. I kept it all in.

What was your formula for mixing reality with fantasy in this film about a film disaster?

It’s all real. I don’t distinguish between reality and fiction, that’s my problem. That’s why I keep getting knocked down. I don’t think I conquered any windmills – I lost a lot of battles with them.

But dreaming the impossible dream has always compelled you, hasn’t it? Like your heroes in “Brazil” and “The Fisher King”?

The thing is, when I was younger I thought that everyone saw the world the same way I did. As I got older, I realized my version of the world is very, very different. Imagination is always a part of it I guess.

You want to be able to fly, you want to be able to do anything. All my films are about that battle between reality and fantasy. The image I like the most is in “Brazil,” when Jonathan Pryce is wearing this big rig and taking off, and the paper just grabs him. And that’s it. That is it. That’s the way I see life.

I look around and see a building and think, ‘Wouldn’t that be great if just sailed away?’ In “The Meaning of Life” there is this opening with this building just sailing away. I am looking at the building and there is this scaffolding, and then wind catches it just like the sails of a schooner.

That’s the great thing about film, or animation. I can have these little moments that are playful and I can leave them be.

The process of capturing those images on film involves a host of practical, technical problems, doesn’t it?

They are all the same to me. Years ago, there was this filmmaker who asked me, “How do you do your fantasy sequences?” I said, I shoot them exactly like the real ones. There is no difference for me. These things change, but only a little bit.

But you don’t go woo-oo when you go into fantasy. I like the fact that if you do it well, the audience is just swept along with it. They are in this rather fantastic situation before they realize it.

Some of it came from living in L.A. in the 1960s. I lived up in Laurel Canyon and, well, it was a wonderful time. All these convertible cars and always somebody to pick up, because everybody just hitchhiked all the time. This girl I once picked up, we became close for a while. But she was an acidhead. She took LSD all the time and you would be talking to her, and then she goes like that (looking to the sky).

You would say, “What’s wrong?” “Oh, nothing – a tree just flew by.” “Okay.” And you live with it. With all these drugs and being around a lot of drug taking, I never had to take it. You start very quickly identifying what the others are on. And it doesn’t take long for your mind to go: “Oh, I can do that without the drugs.”

You said once in reference to “Brazil” that we need terrorists. Is it still the case?

Of course it is. The Chinese really did it first – the tiger at the gate. This is how you control the population. You make sure there is some kind of a threat. Whether it’s real or not, we need them.

Americans in particular seem to be creating terrorists. ISIS has been good for a while, but now it looks like they are finished. So there will be another one – we killed enough kids in the area for them to grow up and want to bomb something.

How do you justify the world’s biggest defense budget? When there is nobody out there that’s even remotely close. And I mean, poor little North Korea…but I think Kim Jong Un is very clever, he played him very well.

You’ve said you have recurring visions of levitating – is this what interested you in adapting Paul Auster’s “Mr. Vertigo”? How is that going?

That’s funny, I hadn’t really thought about it for years. But somehow it came up in Cannes again and I thought that everybody had forgotten about it – I have. I don’t know why it keeps coming back. It’s a beautiful book and we worked on it quite a bit. And now that “Quixote” is out of the way, these things are popping up like mushrooms.

I wanted Ralph Fiennes to play the guy, and somebody told me he is not bankable. I went, ‘What?!’ That was the moment I said, ‘Oh, fuck this. If Fiennes is not bankable to get this film off the ground…that’s the most depressing thing about this business. You say Jonathan Pryce and they say he is not bankable.

But casting decisions can still be key to getting a project produced for you if the actor is right, can’t they?

This movie [“Don Quixote”] happened because of Adam Driver. Others helped it, but Adam was the guy who is the hot guy. I had never seen him do anything. The only thing I had seen was “Star Wars,” when he is opening his mouth and all that. But my daughter, who is one of the producers, said, “You gotta meet him.”

The minute I met him, I noticed this quality about this guy that was unlike any other actor I’ve met. A stillness and genuineness. I also liked the fact he didn’t look like a lead. He has these big ears and a big nose. I just thought, ‘This guy is great! He is not Johnny Depp, he is not Ewan McGregor. That was it.

Both he and Joana Ribeiro, I was always worried that I would have to get other actors to play younger versions. They both do it brilliantly, even their faces seem to have different shapes. And it’s all coming from inside. They became this wonderful double act.

Your heroes don’t win, do they?

No. They survive, but they don’t win.