I might add I cleaned out Adobe folder and media cache. I'm creating output to folder defaulting to c drive.
Did you clean out the Meda Cache, before you discovered the loss of Audio?
To play Audio on the Timeline, and to display the Waveform, you need the CFA and PEK files. This article goes into more detail: http://forums.adobe.com/message/3892177#3892177
One of the most common causes of not having Audio, or truncated Audio, is that the Conforming process did not complete 100%.
Also, can you confirm that these AVIs were created by Premiere Elements while capturing from a miniDV camcorder over a FireWire connection?
If not, you may need to identify the audio and video codecs using a program like G Spot or MediaInfo.