also, i have tried renaming the file names of the two videos to both .mpg and .mp4, neither of which has worked, i also installed the update (it was on cs5.5) of cs5.5.2.
none of this has worked
It is unlikely for an Ae composition of any degree
of complexity to play smoothly in the Source Monitor.
And in most circumstances for an Ae composition to play smoothly
in a Premiere timeline you must 'Preview Render' the timeline first
by selecting the timeline and hitting 'Enter'.
Once rendered, your timeline will have a green line above,
and barring hardware issues should play smoothly.
Premiere Pro CS5-CS6 Reference
(.pdf 12 MB download)