I just fixed the problem using the Prism video converter.
I used these settings:
Output Folder: set your save location
Output Format: .avi
Encoder Options: Video Compressor DV Encoder NTSC (Direct Show) or PAL counterpart; Sound compressor DV audio; Sound 48000 Hz Stereo
Edit Options: check mark next to Resize Video and dot next to Shrink or Enlarge the video to the selected size (that is 720 x 480 or 720 x 576).
Glad that you finally sorted out what you were doing and discovered DV AVI.
In your particular situation Prism would serve your purposes of generating the DV AVI 4:3 since your footage is 640 x 480. However, for others with different footage, the free Prism shortcoming is that it cannot offer DV AVI widescreen 16:9; whereas MPEG Streamclip can do the job for 16:9 as well as 4:3.
QuickTime Alternative 1.8.1 that does come with the MPEG Streamclip's required MPEG2 Playback Component (free) also meets the Premiere Elements requirement for QuickTime installed on computer with Premiere Elements to work. This works in spite of the fact that QuickTime Alternative 1.8.1 is not the latest version of the regular QuickTIme.
In post 2 of the following older thread, I detail the use of Prism (for 4:3) and MPEG Streamclip (for 4:3 and 16:9) to produce the DV AVI file.
Any questions or need clarification, please do not hesitate to ask.
Moving forward, do not use AVCHD (MPEG4 AVC/H.264) or H.264.avi in Premiere Elements. It is not supported.
Wow -- a reply not only after I expected nothing further would be needed, but truly even more helpful! THANKS to you and this great site!
Thanks for the reply.
Glad the comments were of interest for now and/or in the future.
Best wishes as you move forward with your Premiere Elements project.
You did a good job resolving your own issue, but, if you have questions or need clarification on anything written here, please do not hesitate to ask.