What computer operating system is your Premiere Elements 12/12.1 running on? For now, assuming Windows 7, 8, or 8.1 64 bit....
In the Premiere Elements 12/12.1 Expert workspace, go to Edit Menu/Preferences/Scratch Disc and set the location for the category
named Disc Encoding.
Please let us know if that works for you.
Thanks. I did not realize that I must restart Premiere to make changes to take effect. Encoding now, I hope all goes well.
Great news that "Encoding now....".
Please let us know the outcome if your schedule permits.
Please never hesitate to ask if you have questions and if you need clarification related to your Premiere Elements workflows. We are glad for the opportunity to customize a reply for your issue to find a solution for your issue.