It depends on your source video. Premiere Elements 9 can work effectively with pretty much tape-based miniDV and HDV only. It has some support for AVCHD, but not as solid support as later versions of the program. There's virtually no support for MP4s and non-camcorder video.
Do you render your timeline (press Enter) whenever you see a red line above the clips on your timeline?
Have you optimized any photos you use in your project to no larger than 1000x750 pixels in size (or 2000x1500 for high-def)?
For what it's worth, later versions of the program (post version 12) not only support a much wider range of video sources but are 64-bit applications, allowing you to take advantage of greater amounts of RAM on 64-bit systems.
I have used the same size .jpg files (2200 max, so I could lower that) and the same source files (HDV) for a LONG time (close to 10 years!) with no problems concerning system memory. I have tried PE 9 on a new machine with no drag and gotten the same results. It is the "conforming" that I think is the problem. Why would it conform to files not present in the project when I have emptied the cache? This is a new foible that turned up last month. I even uninstalled and reinstalled and made sure that 9.0.1 was updated as well and still have this problem. I render often and that helps keep me editing, but doesn't usually get me through a 10 minutes video project. When I do manage to make it through the editing and rendering, it won't save to avi.
I don't know why this is happening, Shirley.
Try launching the program and then holding down the Ctrl+Alt+Shift keys on the LEFT SIDE of your keyboard as the program starts up. Wait until you see an indicator that the program is making a change on your computer and then OK it. This will clear out corruptions that may have crept into the program's preference files.
If that doesn't work, uninstall the program (You won't lose any work), run CCleaner to clean out the registry, delete any files in C:/Program Files/Adobe/Premiere Elements/9.0 and then reinstall. That should give you a clean good-as-new install.