Premiere Elements does not perform well with MJPEG files, Torrey. If you'll convert those files to DV-AVIs before you bring them into Premiere Elements, your output should come out fine.
OK, I figured this out after 2 days:
MP4 rendering in PE 7.0 will produce a file with every other screen blank and green when utilizing the iPod presets. Oddly, even though it does not display properly with Quicktime or iTunes (which uses Quicktime) it WILL work when loaded to the iPod. This is an Apple issue, not a PE issue. You CAN solve the incompatability (between iPod and Quicktime/iTunes) problem by rolling back Quicktime to 7.4.5. There is also a discussion of MP4 compatibility issues with AppleTV @ http://discussions.apple.com/thread.jspa?messageID=5705015 These settings are the ones to use if you want an MP4 to play on your desktop. The upshot of that discussion for me was for desktop playback, you need to tinker with the "Advanced" Settings dialog box (accessed through the "Share" and then "Mobile Phones and Players" buttons.) You need the the Profile set to "Main" and the Compatibility set to "Standard." For iPod playback, you need the Profile set to "Baseline" and Compatibility set to "iPod." If you want to know why, go to Wikipedia.org and type in h.264.
Steve is right- to play with Motion Jpeg, you have to install additional codecs. PE then works just fine. I got mine at http://www.free-codecs.com/Motion_JPEG_Codec_download.htm
Great solution, Torrey. Thanks for reporting back!
I'm have a similar problem, using the default iPod profile I too got the blank & green screens both on my PC and when I transfered to an iPod. I tried changing the Profile settings as described and the resulting mp4 video file would play in iTunes and Quicktime on the PC, but it will not transfer (thru iTunes) to my iPod. I'm using Quicktime 7.6 (472) and Premiere Elements 7 (trial). Any ideas?