It most likely has to do with the specs you selected when you started your video project.
Your camera shoots in a variety of video modes. If you're planning to edit in Premiere Elements, you should be shooting in 1280x720 AVCHD Lite. it's the only format you'll likely be able to edit successfully in Premiere Elements. (At lower quality settings the cam shoots in MJPEG.)
When you start your Premiere Elements project, you will need, then, to select the project settings for AVCHD Lite. (Version 11 sets up your project automatically -- but earlier versions of the program require you to do this manually.) When you look under the Edit menu, what project settings are listed?
Version 9 also is not terribly efficient with AVCHD footage. With a MacBook Pro, a good load of RAM and a project that is properly set up, you should still get great results. But it wasn't until version 10 that the program was able to work truly efficiently with AVCHD footage.
Please let us know if shooting in AVCHD Lite and setting up your project for this video format changes your performance.
I can't seem to see how to set the project settings to AVCHD Lite. Under 'general' I can see QuickTime DV NTSC and when I go into playback settings, the only options are DV or 'none'. Is this something I need to set manually?
RE: RAM - was debating getting some more. I'm currently only on 4GB. Would 8GB do the trick? Or would I need to bump up to 16GB?
You should be just fine with 4 gigs. if you've set up your project correctly.
Again, you can only set your project's settings when you first start a new Premiere Elements project. You will not abe able to change them mid-project. (If your project settings are showing NTSC DV, it is set up incorrectly, which is why you're getting poor performance.)
Just go to File/New Project and, on the new project panel, click Settings. On the Project Settings screen, select the Settings for AVCHD Lite 1280x720p.