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Smartest thing you could do is convert your video files to DV-AVIs before you bring them into Premiere Elements, Paul. That's the video format Premiere Elements is built around, and it handles them most efficiently.
Not that you should be sweating things with XP on a quad core! There has got to be some bottleneck some place that stealing your power!
You say you have two drives. I assume you're using your second drive for your video project and video files. A couple of things:
1) Make sure the drive is formatted NTFS and not FAT32. You can find out if this is so by opening My Computer, right-clicking on each drive and selecting Properties.
2) Ensure that the second drive is set up in your BIOS, not just your operating system. You can find out if this is the case by pressing ESC or F1 at the logo screen (The logo screen that appears BEFORE Windows starts to boot up) and entering your set-up area. If you haven't been here since installing that second drive, it's important to make the necessary updates here. Otherwise, your drive will chug along like a drive half its speed.
But I still recommend converting that file to a DV-AVI. You'll be amazed at how much better your whole system works with them!
I have benchmarked all the drives (and everything else) using SiSoftware Sandra toolkit and everything is performing as expected. I tried converting the MOD files to AVI with streamclip but it crashes. I'm not sure if the Canon is producing files that are 100% to spec or if it's something else.
Can you recommend some other utilities for converting MOD to AVI?
VirtualDubMod is an excellent free tool for doing that conversion.
A great all-around free conversion tool is Super.
But I'm concerned that even MPEG Streamclip is crashing your system! It makes me think you've got some more fundamental issues on your system you need to address.
try turning off your antivirus program exit PE and open again ... works for me. I at least have identified TrendMicro as the problem now i have to find a permanent fix so i can leave it running - excluding the videos folder from the scanning did not work.