1. Do you see a red line on top of the clip on the "Expert" mode? Check the project settings (Edit -> Project settings). If this is not PAL DV - Go to File -> New Project and manually set the project to PAL DV Standard/Widescreen from the "Change Settings" button
2. If all this is alright, right click on the monitor and set the playback quality to Highest.
Also, is there a yellow line above your clips on the timeline in Expert view? If so, you need to render your timeline (by pressing Enter on your keyboard or clicking the Render key).
And, as VDO says, you can set the quality level of your playback by right-clicking on the Monitor panel's playback window.
That is because there is no manual to check hoe to do anything---
That is called pressing F1 to bring up the help file... or, to read outside the program
Online User Guide http://help.adobe.com/en_US/premiereelements/using/index.html
-Page to download current PDF http://helpx.adobe.com/premiere-elements.html
-Previous versions http://helpx.adobe.com/premiere-elements/archive.html
And, some online reading
Importing Video http://forums.adobe.com/thread/1065281
-and project settings http://forums.adobe.com/thread/1112086
Saving & Sharing http://forums.adobe.com/thread/1051093
Sharing for Computer http://forums.adobe.com/thread/1058237
Steve's Basic Training Tutorials... steps are the same for several versions
Thank you for the feedback. Have solved the problem using your tips.