First, try the right forum http://forums.adobe.com/community/premiere/premiere_elements
Second, BEFORE you go there, follow the steps below, so you provide the needed DETAILS when you post in that forum
This is aimed a Premiere Pro, but may help
First, work through all of the steps here http://ppro.wikia.com/wiki/Troubleshooting
If your problem isn't fixed after you follow all of the steps, report back with the DETAILS asked for in the questions at the end of that link
In addition to having at least 2 gigabytes of RAM, you should have at least 25-30 gigabytes of free, freshly defragmented space on your hard drive. It's important that this space be defragmented so that Premiere Elements can use it in large chunks!
I have a 1000GB Hard Drive, used solely for editing and it currently has 361GB free. I defrag it at least weekly.
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Beyond that, I don't have enough information about your system or your source files to offer direction.
Although I trust you've gone to Windows Update and downloaded even the non-critical updates as well as updating your video card drivers and firmware and the latest version of Quicktime.
If you have a Nvidia (or should that be an Nvidia?) graphics card running any of the 180 or 190 series of drivers try uninstalling the 3D Stereoscopic driver from Control Panel> Uninstall a program. There is a conflict between that and PRE. I really must get around to putting this into my boilerplate text .
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In addition to the suggestions mentioned above. please also post with what kind of clips you are seeing the problem - DV, HDV etc and the project settings you are using.
Applying transtions to avchd clips might be a little sluggish at times but generally applying transitions works fine.