No, it is not a bug. The file you got uses the wrong codec for editing. Convert the file to DV AVI type2 before importing into PR.
When will people understand that AVI is meaningless, it is about the codec used within the AVI wrapper.
Any long files output by CamStudio 6, including those created with an editable codec like Lagarith, will choke Pr CS4.
The 3-minute, 30-second time length is significant because that is precisely the "sweet spot". Any clips longer than that will choke CS4, and any clips shorter than that will work OK. The short clips can use any codec, including the TechSmith codec, and they will work perfectly in Pr CS4.
I've filed a bug for this already. AFAIK, CamStudio 6 is the only app that causes the issue in Pr.
I see similar, from time to time. My conversion program outputs clean DV-AVI Type II's most of the time. Every now and then, I get one that behaves like yours. Why? I have never found what the difference was. My fix is to Import the offending DV-AVI Type II into Premiere Elements, and just do an Export to DV-AVI Type II (yeah, I know that that *should* be the same, but it's not) and then Import THAT DV-AVI Type II into PrPro - has worked perfectly 100% of the time. Wish I knew the why, but with my workaround, I can live with it.
Obviously, most people do not have both PrPro and PE, so you may have to find another DV-AVI Type II-based editor, that is more lenient and use it. Maybe just the right intermediate CODEC can fix this for you.
most people do not have both PrPro and PE, so you may have to find another DV-AVI Type II-based editor
VirtualDub. It's free.