This is an old story for Premiere Elements 12. By the way, have you updated to 12.1? If not, please do so using an opened project's Help Menu/Update.
For your immediate issue, please read the following and determine if the fixes of Llamadude99 and others work for you. Adobe has never addressed
Please review and consider and then let us know if any of the above worked for you.
The steps in tommy_lop, below, worked as indicated. Not only does this allow the narration to work with all other tracks, it also allowed the previously non-functioning tracks to function properly again.
Also in May 2014 the ID tommy_lop posted with this Premiere Elements 12 problem and, after being informed of Llamadude99's fix, wrote
Yes \ it does seem to work on most clips....
Actually, I think just unmuting narration, hitting play while still in the narration pane, and then hitting done has the same affect without having to do so many steps.
Thanks for the follow up which is much appreciated by all.
Great news that the approach of tommy-lop work for you with this loss of audio related to the addition to the existing Timeline content of narration from the Narration Tool.
Best wishes with your video projects.