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Don't know why opacity and dissolve aren't working for you, but the red highlight only indicates default transition, nothing more.
What happens if you try rendering the area around your opacity change or transition...? Does it preview properly at that point?
Make sure you have enough head and/or tail material in the original clips to last the duration of the transition.
Also, don't try to cut a single clip in the timeline and then add a dissolve. All you will get is a blending of the exact same frames from each of the 2 new clips and it will look like nothing is happening.
Following Jeff's suggestions, read up on "Handles."
Now, if you *need* to do a Transition, in an area, as Jeff describes in his last paragraph, Dip to Black is the only choice - no Dither Dissolves, no Page Curl, no Cross-Dissolves. Again, the "Handles" info will give you all of the detail that you need, including the do's, the don'ts and the "what will happen if I try it." Premiere will usually even throw an error message, that is explained in detail in the "Handles" section of the manual, though without that reading, you might not be able to make much sense of what it means, but it boils down to "what Jeff said."
PS this is an often misunderstood, or overlooked aspect of NLE work. With film, it was a lot easier to grasp, 'cause you could actually see the frames on your A-roll and your B-roll and where the black leader was spliced to each. With digital, while it's MUCH easier to do, it's not as visually graphic and people just miss the concept. Once you read about it and think about it, it'll become patently clear.
Hi, thank you very much for your advice! I tried rendering a short clip, then I noticed the opacity key frames and dissolve transitional effects are working.... I do not know why I did not see those effects in the monitor window when editing in Premiere.... But those are rendered.... The problem is that a fine tunement is not done satisfactorily because I could not viewe how it works in monitor wondow... Pemiere had never acted like this before in XP.... is this related to Vista....? I wonder.