What CODEC was used to encode the source file. If you do not know, then G-Spot can tell you. My *guess* would be that it's DivX, or Xvid. These can cause all sorts of problems.
I do not have the specs for CS4 handy, but it could well be that you laptop is on the weak-side. This would be especially true, if you only have one HDD as it's obviously trying to do everything. HD material, even in perfect formats/CODEC's take a toll on the I/O system.
You change your screen name, or is that just another 'benefit' of our new fora?
The original files were Final Cut Pro Quicktime files that I Demuxed using Avanti and FFmpeg into MPEG2 files. Also all the video files (which are between 7-8GB each) are stored on an external hard drive, but I guess what you're saying is that it's better to have Premiere installed on a 2nd hard drive seperate from the operating system?
Premiere can go on the drive with your OS but the video files (assets) are best on thier own drive - a fast drive. If you external drive is usb connected that will be a bottleneck.