That particularly still camera shoots video in the MJPEG codec, a codec that version 7 does not work with well. This is further complicated by the fact that, at certain settings, your camera shoots in 60p, a format version 7 does not support at all.
It's possible your computer can work with this video -- but it's going to be an iffy proposition. You'll need to render often. (In Timeline mode, press Enter to render whenever you see red lines above your clips.) And even then you may not get good results and it may tax the program heavily.
MJPEG video is best edited with iMovie and Windows MovieMaker. Premiere Elements 7 is best with standard camcorder video, like miniDV, HDV and AVCHD.
That explains a lot then. Will give it a crack based on your comments but understand now that I may be expecting too much of the software.
One additional consideration: PrE 7 is a 32-bit program, so it cannot take advantage of your 64-bit OS, and your extra RAM - it was just written at a time, when most OS's were 32-bit.
Your computer is strong enough (especially if some of the "other" programs and processes are shut down, like your anti-virus software). It should be able to handle most material easily, but you do have one bottleneck - PrE 7.
This might be a good situation, where you consider upgrading to PrE 11. Note: PrE 11 has some changes that you might find great, or maybe not so great. Steve Grisetti has done several articles on the changes in PrE 11, and I would recommend reading those, plus some other reviews, to see if you like those changes, or not. Also, I would do a trial of PrE 11, and take it for a 30-day "test drive."
I had to upgrade, as so many people are on PrE 11, and to help them, I needed to be seeing what they were seeing. Still, and some months later, I am still "feeling my way around" the program. At this point in time, I probably feel more comfortable with older versions, but am learning how things are done now. [As a personal aside, I liked the "feel" of PrE 3, as it was closer to the feel of PrPro, my main NLE program.]
For MJPEG, take a look at this article, as it might have a useful tip, or two: http://forums.adobe.com/message/4079377#4079377 MJPEG is a very old CODEC, but gained new life when Nikon, and a few other camera mfgrs. breathed new life into it, by doing some major tweaks. There is nothing really wrong with it, but one is best served to have the exact version, from their camera mfgr. installed, to smooth things out. While there are some good generic MJPEG CODEC's, with the camera mfgrs' tweaks, things just go more smoothly, if they have the exact version installed. Also, MJPEG does take some extra processing horsepower (not nearly so much as H.264), it will always likely lag a bit, compared to something "plain vanilla," such as DV-AVI. Still, you HAVE the horsepower (though it is a tad hamstrung by PrE 7), so should not really notice that. I see it on my older laptop, with a 32-bit OS, and far less hp, than you have.
PS - if you have not updated your nVidia driver, I would do that too. Though you did not indicate any GUI issues, having the latest driver might also speed up screen re-draws, thumbnail generation, and some other functions, that could by typified as "slow downs."
Thanks Bill for your reply.
Yes, the nVidia drive has been updated just this week to make sure that is the latest version.
I will take a look at your link and also consider giving PrE11 a trial as well.