Make sure that AE, Camera Raw, Photoshop and Lightroom if you have it are up to date. If that doesn't work use Lightroom or Bridge to export a tiff sequence. If you are taking high rez raw files shot as time lapse then I highly suggest that you size them to an appropriate frame size for video before you import the sequence.
Everything is up-to-date, which may be the problem. I read on a forum that Adobe Camera Raw 9.5 doesn't work with AE, but that 9.1 does. Now I'm trying to figure out how to get back to an earlier version.
I've imported raw files into AE before and I prefer that over converting to tiff or jpg because I have more control over the final resolution and can further refine color, etc. in AE, coming from Lightroom. Sizing to the appropriate frame size before going into AE isn't the ideal solution because it is too limiting.
That was the issue. After downgrading to ACR 9.1, the files opened successfully in AE. As ACR 9.5 has been around for awhile, it seems that Adobe would have fixed this bug by now.