I loaded mpeg file to Premier Elements 8 and could see preview in right pane but could not see movie in viewer of left pane filled with green screen. When I clicked the viewer, I could see the shot normally. But it turned to green screen again when I click play button. I encoded the file from mpeg to avi with MPEG Streamclip and tried again but it didn't improve. Please give me any advice, setting up etc...
When you say "it didn't improve" do you mean that the converted AVI showed up as green in your project also?
Look at the timeline when you place the clip on it. Is there a red line above your clip? That indicates that the clip needs to be rendered. Press Enter and the red line will turn green. The resultant video will look much improved.
Whenever you load a non-DV format (including MPEG) into Premiere Elements, the program needs to conform it. Depending on how long this clip is, this can take a couple of minutes or as long as five. But, as its conforming, it will display the symptoms you describe -- It will not play, although you can scrub to specific frames. Usually this conforming is represented by a a green progress bar in the lower right of the program.
Give the MPEG or AVI a few minutes to conform in the program. Chances are it will play just fine in a couple of minutes.