Hard to say without knowing more about what these video files are, how long your video project is, what operating system you're using, what your computer specs are and how much free, defragmented space you have on your hard drive.
You have most likely run out of resources in some format or another (likely out of hard drive space), but that often results in a crash rather than a lockup.
The real test would be if you can start a new project and add files to it.
Which project setting you used, Is this AVCHD 5.1 or what's the file type? Is it 5.1 channel file.
if not delete all tracks from timeline by right click and then add media from organizer. if it does not help, create new project (NTS Std) and then add media to timeline.
I've hit exactly the same problem. I cannot move the clips, or add any more clips to he timeline. I also cannot add any transitions.
I can remove clips ok, but then I can't add them back in again.
I switched to Sceneline and then back to Timeline and the Timeline isn't being redrawn correctly, which does suggest that something bad has happened to the application.
The timeline is also scrolling left and right when the application isn't in focus.
My video is 22 minutes long so far. I've got 75G of disk space and 1G of memory free.
I'm running Premiere Elements 7 on Windows Vista 64bit