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If your FireWire connection to your camcorder is properly configured, you shouldn't have to press play on the camcorder and start the capture in the program. You should be able to control the camcorder with the program.
Do you have a FireWire connection to the Canon and can you stop and start playback of the camcorder from Premiere Elements?
After increasing the paging file, I gained device control (play, stop, ff/rwd, and scrubbing), so that is not a problem anymore. Now it is just an issue when I have video preview on during capture that it really slows down.
The firewire port works great. In fact, it's strange because I also have Premiere Pro 1.0 installed for other purposes and I have absolutely no problems running that program.
I have the same problem with my Samsung MiniDV camcorder. On the capture screen, only the record button is enabled. The only way to get the transport controls in PRE7 to "release" is by using my little remote to play back a part of the tape in the camcorder. I cannot stop the tape from PRE7, only pause it. I have to use the remote to stop it.
Ensure that you have the latest version of Quicktime.
Otherwise, it could just be a laptop thing. Laptops are generally designed more for portability and office work than for high-end, intensive things like video editing. I was on a Mac forum today, and even there people were recommending against editing video on a Powerbook.
You might be able to. Many people do. But the odds are against you.
I had similar problem but it went away after updating the video driver on my system. You could give that a try.