Media Offline usually means that the location of the media files has changed - it could be that they were Moved to a different folder, the filenames have been changed, or the media files have been Deleted. Have you done anything with those media files?
This Tips & Tricks article goes into more detail: http://forums.adobe.com/message/3465347#3465347
There is also a link to the error message, "Where is file ____ ?" If you have received that error message, please see that link.
Also, for more information on the Project file (PREL), see this Tips & Tricks article: http://forums.adobe.com/message/3397716#3397716
Good luck, and let us know a bit more please.
When the files are converted they are stored in the Video library that's where I get them from when I
Add Media. After I finished this movie I started a new project so I made a new file folder and moved each separate clip into the new folder so the new clips didn't get mixed up with the old ones and I wouldn't have so many files in view when I opened the Video window. It is still stored in the Video library but would just moving them into their own separate folder cause the change? In the future I will make a folder and put them in it immediately if you think that would solve the problem. Would adding more clips to the folder cause any problems? Thank you.
It was the Moving of the files that has caused them to become unlinked. PrE uses absolute Paths to link the media files to the PREL file.
If you remember where you Moved the files, you can go to the Project Assets Panel (I would use List View here, rather than Grid View), and for each Offline Clip, Rt-click on it, choosing Replace Media. Then, navigate to the new location, where you Moved those files, and choose that location to re-link.
When I use common Assets, I make a Copy of the Asset, and locate those in sub-folders under my Project's main folder. I leave the original on my storage HDD (Hard Disck Drive). I leave those Copies in place, until I have completely finished my Project, as Moving them, or Deleting them will break the link to the Project file, the PREL.
Good luck, and hope those articles are helpful. If there is any confusion, or something that is not clear, do not hesitate to ask.
I am not sure it has been mentioned in the links already provided for you, but to avoid these media offline/media missing situations related to moving, deleting, or renaming folders and files that went into a saved/closed project, please look into the Premiere Elements' File Menu/Project Archiver with its Archiver and Copy options.
Besides the classical missing media associated with what I discribed above, the user can get into some weird missing media situations as detailed in my blog post on media offline/missing media messages when trying to use Premiere Elements' Instant Movie Outdoor Adventure theme.
Please do not hesitate to ask if you have questions or need clarification on anything written.