The Canon HG10 is an AVCHD camcorder, the most intensive video format to edit. Most people who are successfully editing it in Premiere Elements are using quad core processors with 4 gigs of RAM. It's possible Corel operates a bit more efficiently and could possibly run it on your system. (Make sure you render your video in Premiere Elements, by pressing Enter so that the red line along the top of the timeline turns green, before you judge the playback of the video.)
Regardless, ensure that, when you're editing it in Premiere Elements that you're using an AVCHD project preset and that you're using the Media Downloader (under Organize, Get Media, AVCHD Camcorder) to download your video from the camcorder. Using one program to capture your video and another to edit can often lead to problems like you're experiencing.
THanks steve, you are totally correct. After rendering the video clips, i am able to view the clips with no lags or any problem. However, i just have one more question. Is it normal to take a long time to render the clip? like for example, it took like 2 mins to render 40 secs of clip.
With AVCHD clips, yes.