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Like most video editors, Premiere Elements can not edit Divx movies. (Divx is considered more of delivery format than an editing format.)
I've also searched for converters in the past but have yet to find a Divx/DV-AVI converter that I'm satisfied with.
Have you looked at www.divx.com ??
Since they own the codec, it would seem to me they would have tools to edit the file
Of course... that is logical... and logic is not always followed by vendors
To date, I have had good results converting from DivX and Xvid to DV-AVI with Deskshare's Digital Media Converter (shareware, but with a trial). Now, you do need to have the proper CODEC's properly installed on your system, as DMC does not ship with any of its own. It allows batch conversion (to a single folder), and is quite fast on my workstation and laptop. I cannot recall a conversion that PE would not play perfectly with. "Perfectly" does leave out the quality hit, but you get that when the source material was initially encoded as DivX. Nothing that you can do will ever make it better. Note: DMC is not DivX-specific. It will handle *almost* anything. If it does not, initially, I run the file through Digital Video Repair (freeware for AVI files), and work with its "repaired" version. That has always fixed any problems.
As a side note, I have had some issues with Premiere Pro Importing some of these conversions with a truncated Duration - do not know why, as they are full DV-AVI with the MS CODEC. I learned to Import them into PE (comes in with the proper Duration and synced Audio, if it was in sync in DivX), then Export to DV-AVI from PE. Viola, PP now sees the proper Duration. Do not know what exactly causes the problem, but a quick run through PE fixes it. One more step, but has been 100% so far.
PS remember that you WILL need the CODEC's properly installed first. I also suggest buying your CODEC's, rather than getting free, hacked, or reverse-engineered ones. This aleviates a lot of problems.