When you convert the file to .avi, make sure to use a video codec that's
editing-friendly, like uncompressed or DV. Also make sure to convert
the audio to uncompressed .wav audio.
I don't have the direct link handy (maybe Eddie will stop by with the link) but I do know that the wiki has MANY articles you should read... including information on file conversion
I really don't know where to go.
I'd recommend two things:
1. Use a tape based MiniDV camera for future recordings you intend to edit with Premiere Pro.
2. For this job, try a consumer editor. Movie Edit Pro from Magix may work.