Welcome to the forum.
First, tell us about this "MPG" file. If you need some background on AV file "wrappers," and how to peek inside them for info, this ARTICLE will help you.
With that info, someone can likely help you.
I agree with Hunt. It's most likely a codec issue.
What type of camcorder did this video file come from and how did you get it into your computer?
Assuming the Mpeg file plays okay outside of PE, I would convert this to the DV-AVI format prior to import into PE.
Use the tools at this link for conversion (my preferred tool is Prism):
If converted successfully, chances are excellent that your problems will be eliminated...
It is video captured live and received from a DVD. I tried changing the Hardware settings and got audio for a while then it got out of sync, then went away. This makes aboslutely no sense. What settings do I need to have?
I have three Output options, Speakers and Dual headphones, SPDIF, Indepenedent dual headphones. I've tried every combination and get nothing. Please help, this is absolutely ridiculous.
Now, if this is a 100% DVD-compliant disc, you should be able to directly Import it into PrE and work with it. This ARTICLE will give you some background on DVD/.VOB's.
With some .VOB's, one can just change the file extension to .MPEG, and it will Import fine. With some, other steps must be taken to rip the MPEG-2 files from the .VOB(s).
One common method is to hook up a DVD player to a miniDV tape video camera w/ passthrough and just play the DVD while Capturing the resulting signal, passed through the video camera. In some cases, one has to record the DVD via the same hookup to tape, and then Capture from that tape. Others use A-D bridges, or capture cards, and while they are not going from analog to digital, as the signal is already digital, the playback is analog.
Some use ripping software to get the MPEG-2 and the program used will often determine how well the resulting file plays and edits.
In all that has been written so far, I do not see a description of what you have, other than:
mpg, video captured live and received from a DVD.
1. What is on the DVD that you received? A video in DVD-VIDEO, standard or widescreen? Or, a video file with a file extension in the mpg family with High Definition formats of HDV or AVCHD? What exactly is the file extension of the file? And, how are you bringing it into Premiere Elements 8?
2. File conversion is a possible workaround for your type of issue. But, a recommendation has to be made based on details. Converting a problem file to DV AVI (NTSC) with Prism is fine if you want a DV AVI 720 x 480 30 frames per second and 4:3. It does not have an option for 16:9 widescreen. Both DV AVI (NTSC) standard and widescreen have frame size of 720 x 480. A widescreen option would contribute a 16:9 flag for display purposes after encoding. So, if you are working with HD video (16:9), you need to keep this limitation in mind.
3. Depending on how you define your starting media, I would recommend MPEG Streamclip for the conversion (for the appropriate starting media which I still do not know). This free download will offer you more options, including 16:9 if needed.
I had not considered that it might be a DVD-Data. I just jumped to the conclusion that it was DVD-Video.