.prel files are project files. They are not media files. A Premiere Elements project (.prel) file is opened by going to File/Open.
Media files, like MOVs, AVIs, MP4s, M2Ts and WAVs, are audio and video files. They are added using Add Media.
If you need more information, be sure to check out my free 8 part Basic Training tutorial series at Muvipix.com.
Part 2 shows you how to add media to a project.