The biggest challenge is that you're trying to edit video from a $3500 professional camcorder on a $75 consumer editor.
Premiere Elements does not edit MXF video. It also does not support 1080p video well.
For best results, I'd recommend you look to a program like Premiere Pro or, at the very least, Vegas Pro. It's just never going to interface well with Premiere Elements. Sorry.
Okay, I do have another solution, but this causes my footage to become 4:3 ratio.
I simply import the files directly onto my computer; the raw .MXF files from the P2 Card.
I then convert these .MXF to a specific HD format, but the footage always comes out with black bars on the left and right side.
I can't seem to get the footage to be 16:9 ratio with black bars on the top and bottom.
I am currently shooting in 720p/24pN.
Is there a fix to this?
Also, what if I film on a SDHC card instead of my P2 card? There is an option on my camera to insert SDHC; perhaps that will help?
Converting files as pitfalls of its own.
I really do think you're trying to fit a square peg in a round hole here, Alero. This is the wrong software for that camcorder.
I agree with Steve here. Premiere Pro is much better suited for the P2 files from that camera. They should Import, and edit easily. PrE is aimed squarely at the consumer market, and while it can handle some "pro" material, that is not what it was designed for.