When dragging Imported Clips to the Timeline, if one initially gets a red line above those Clips, it indicates a mis-match between the Clip and the Project's Preset.
Please let us know the full specs. of the Clips, and then the Project's Preset, chosen at New Project.
Thanks for replying: D1/DV NTSC Widescreen 16:9 (1.2121) for both.
If that is correct, when you drag the DV-AVI to the DV Timeline, there should NOT be a red line there. If is, then something is wrong.
Now, if you add an Effect, or any sort of overlay, such as a Title, PiP or Transition, you WILL get a red line there.
I opened a new project, dragged the same DV-AVI to the video 1 timeline: no red line . . . "Intepret Footage" says: Pixel Aspect Ratio D1/DV NTSC etc.
Next: Title/New Title/Default Still/Done . . . title appears in Video 2 . . . and so does a red line above it . . . "Interpret Footage" the same . . .
That's fine. It is PRE's way of telling you that you have adjusted a clip. If playback is jerky you can press [Enter] and PRE will render the timeline for a smoother preview. If you have lots of red lines and only want to render a small piece then set the WorkAreaBar to cover just that piece.
Note that none of this is necessary and it makes no difference to your final output as PRE always renders the entire timeline during the Share process.
Insanity is hereditary, you get it from your children
As nealeh said, whenever you see a red line, it means for smoother playback experience, you need to render timeline. (Simply press ENTER) It takes time usually, but its better to do it sooner than later.