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The first thing to check when you get these kinds of problems is how work drives are set up. Are the drives that your project and scratch files are on set up as NTFS rather than FAT32? FAT32 (as all hard drives are formatted by default) have a file size limit that often chokes video editing work.
Also, make sure those drives are clean of temp files and defragmented.
And what type of camcorder is this video from and which project setting are you using in your Premiere Elements project?
Along with Steve's comments, I'd look very closely at the Clips in the Timeline at the 8-15% point in your Project. What is happening at that point? Do you have any gaps, or similar? Do you have any speed changes there? Zoom the Timeline up to the Frame level and study everything very carefully.
To answer your question. They are all NTFS. The drive I am exporting to is a fresh 1.5TB drive with nothing else on it.
The camera I used for most of the video is a Canon HF10.
So that is the part that confuses me. When I export the first 8% is compiling the menus, and it stops at 11 or 15% with the transcode error. I also read that the program makes two passes so should I be looking at the 3-8% part of the timeline or the 6-16% part of the timeline. I went through and made sure the Video line has it's gaps filled with a small black JPG. I do have speed changes through out (slow mo video), can that cause errors? One other symptom is that the program grows to about 1.2GB then dies.
I am now experiencing another issue. When I render the work area I constantly get out of memory error. I have basically nothing running on my computer.I have 4GB of RAM and 1.3TB of space on the drive I am working from. I hit render once the project comes up. So I have not done anything else but load it and then render. Any ideas?