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Sounds like your project has gotten too big and computer resources have been consumed, making everything you do slow, non-responsive. You will need to break your project up into smaller chunks and work on each chunk in a separate project. Then export each project to a DV-AVI file. Reconstruct the whole movie with just the DV-AVI files in a new project.
If you have photos in your project, resize them to be no more than 1000 x 750 in a photo editing application before adding them to Premiere Elements. The photos that come from megapixel digital cameras are just too big for Premiere Elements.
Have you tried using the "RightClick > Insert to Timeline" option from the project bin.
Ensure that you keep the CTI at the position where you want your clip to be inserted and then use this option, The clip would be automatically inserted in the timeline at the CTI position.
Do you have transitions on either end of the clip?
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