What are the pixel x pixel dimensions of those Still Images?
The file size, the DPI, or PPI, will not matter. It is the pixel x pixel dimensions, that count.
This most often happens when one has overly-large Still Images for their Video Project. This article goes into more detail: http://forums.adobe.com/message/2119226#2119226
Good luck, and please let us know a bit more.
What version of Premiere Elements are you using and on what operating system?
It is essential to this question
a. Are you working with a Photoshop Elements Organizer Slideshow Editor Slideshow and the Output Option = Edit with Premiere Elements Editor?
b. Taking Photoshop Elements out of the equation, are you referring to bringing a folder of photos from the computer hard drive save location into a Premiere Elements project?
c. You are working in the Elements Organizer of Premiere Elements and do not have Photoshop Elements?
d. You do not have Premiere Elements, just Photoshop Elements?
In any case, how many photos are involved, including the classical question about pixel dimensions of those photos?
What is your Premiere Elements project preset?
Looking forward to your follow up.