That camera shoots MJPEG-AVI, not the more standard DV-AVI. MJPEGs can be challenging for some editors to edit.
Although it's possible you can load the codec to your operating system and Premiere Elements will be able to work with it.
While I don't recommend searching the internet for codecs, there is one codec pack what can improve the range of your editor. You can download it here. Go ahead and download the Mega Pack.
Also, make sure you've installed the software that came with your camera. It may well have come with a basic editor that may also install the MJPEG codec.
But if that doesn't make Premiere Elements compatible with the MJPEG codec, I'd use either the editor that came with the camera or, assuming you're on Windows, use the free Windows Live MovieMaker.
NEVER NEVER NEVER install K-lite.
Codec packs are known for messing up ones system.
If you need a codec go straight to the manufacture.
Thank you for your help. I went with your very first suggestion (which is not showing here for some reason) to convert file with HandBrake to mp4 with constant framerate. That worked perfect! I am going to go with that for now. Thanks again!
Yes my initial post was to use Handbrake as I suspected it was H.264 in an avi container.
But then I discovered it was a mjpeg.
So deleted the post.
I went ahead and installed the Morgan M-JPEG Codec v3 (64-bit) and it fixed the problem! Now I can import my videos directly into Premiere Elements 11 with no problem. Thank you again Ann! You Rock!