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Is this an AVCHD camcorder, and were you shooting in AVCHD mode? If so, and you used Premiere Elements to get the video from the camcorder to your computer, you should have no problem editing it in version 11. (I'm not sure what you mean by "I converted my movie to WMA Pro 720p HD" but converting it before bringing it into Premiere Elements is a very bad idea. Premiere Elements 11 edits AVCHD natively.)
That said, have you rendered your timeline (by pressing Enter)? You should render your video whenever you see yellow lines above your clips in Expert view.
yes it an AVCHD camera. I got into the habit of converting to WMV because Avid Studio cannot handle 5.1 surround audio, at least not from my camera which is on an Avid list for problem Sony cameras. I guess I will import it native as you say. Yes I render frequently, but the previews still will not play smoothly.
Thank you for your suggestions
That i7 CPU should be able to process AVCHD well. One bottleneck could be the installed RAM. If you have a 64-bit OS, then 4GB is about what it takes to run the OS, with almost nothing for programs. If you have a 64-bit OS, I would look into bumping that RAM up to at least 8GB.
As Steve suggests, it is best if you edit AVCHD in its native format rather than converting it to WMV. As many folks in this forum can confirm, WMV is not an edit friendly format. But previews should still play smooth. Rendering is done to do just that, playback smoothly. If that is not happening, you can maybe look at the task manager and see if the resources (CPU, RAM) actually max out.