Moving to Premiere Elements forum
More information needed for someone to help... click these links and provided the requested information
Also read and answer the questions here
Read Bill Hunt on a file type as WRAPPER http://forums.adobe.com/thread/440037
What is a CODEC... a Primer http://forums.adobe.com/thread/546811
What CODEC is INSIDE that file? http://forums.adobe.com/thread/440037
Report back with the codec details of your file, use the programs below... a screen
shot works well to SHOW people what you are doing
For PC http://www.headbands.com/gspot/ or http://mediainfo.sourceforge.net/en
For Mac http://mediainspector.massanti.com/
Also TURN OFF YOUR CAPS LOCK
I strongly recommend that article, that John T. linked to, regarding "AVI as a Wrapper," as it applies to other AV file formats too.
There is something inside that "wrapper," that requies a CODEC, that either you do not have installed, or is one, that PrE cannot work with.
The "usual suspects" are MJPEG (there is a usual fix for this), or DivX/Xvid, for which, the only "fix" will be to convert the files to something that PrE can edit.
Please read that article, and report back with what is inside the "wrapper."
You can also tell us what model of camcorder your video is from and we can help you identify the video format and recommend project settings.