What version of Premiere Elements are you using and on what computer operating system is it running?
We need that to give you more specific information.
However, generalizing, the Videomerge pop up is typically triggered by sensing a solid colored background. Its
appearance is not always predictable. If you think your image needs Videomerge, then select your clip, and drag Videomerge
into the clip. I prefer Chroma Key when I want to turn a solid color background into transparency.
However, if your Premiere Elements is on a Mac computer, you are limited in choices in this regard. If you have Premiere Elements Mac, you have no Chroma Key, Green Screen Key, or Blue Screen Key. In this is your situation, then consider the Difference Matte.
Difference Matte can be used by Premiere Elements Windows and Mac users.
Please review and then we can decide what next.
Add On...If you have blocked the Videomerge message by setting for "do not show again", you can change that in Edit Menu/Preferences/General so that you can see all those "do not show again" messages again.
You can also manually apply Videomerge by right-clicking on the clip on your timeline.