What computer operating system is your Premiere Elements 12 running on?
Please go to the web site of the manufacturer of your video card and determine there if you have the latest version of your video card driver. If it is the latest as shown there and the problem exists, then please delete the BadDrivers.txt file.
For now I am assuming that you are running Premiere Elements 12 on Windows 7, 8, or 8.1 64 bit. In that case, the path to the BadDrivers.txt file is:
Local Disk C
and the BadDrivers.txt file that you delete is in that Premiere Elements Folder. Do not open any of the folders in the Premiere Elements Folder. The BadDrivers.txt file for 12 is a file, not in a folder, in the Premiere Elements Folder.
Please be sure to have Folder Option Show Hidden Files, Folders, and Drives active so that you can see the complete path.
We will be watching for further developments and details.
>my computer indicates that the drivers are up to date
If Windows, do NOT rely on Windows Update to have current driver information
-you need to go direct to the vendor web site and check updates for yourself
ATI Driver Autodetect http://support.amd.com/en-us/download/auto-detect-tool
nVidia Driver Downloads http://www.nvidia.com/Download/index.aspx?lang=en-us