Double-check, by going to Windows Update manually, to ensure you have even the non-critical updates. (Many of these are important hardware updates.)
Also go to Apple.com and ensure you have the latest version of Quicktime, which also plays an important role in all PC based video editing.
Also make sure you've got at least 30 gigabytes of free space on your hard drive and that it is freshly defragmented.
Beyond that, any information you can give us could be very valuable. What you've got going on here is very unusual so, if you've got something unusual going on (for instance, the computer was home-built, you're editing to an external drive -- stuff like that) be sure to let us know.
Meantime, go to C:/PROGRAM FILES/ADOBE/PREMIERE ELEMENTS 8/SETTINGS and ensure you have a sub-folder in there called EDITING MODES.
Also check the sub-folder in there called SEQUENCEPRESETS and make sure that it has NTSC and PAL folders full of files within it.
One of the specs. missing is your I/O sub-system, i..e your HDD's, their speed, size, amount of free space*, the controller type, and how you have them allocated. That can be very important.
* Steve has asked about this specifically, and the rest of that info will be very useful.
I followed your advice and ran into a snag. Please see your comments below and thanks in advance for your time.
There is one change. I no longer get an error message. I just get the Welcome Screen. After choosing "New Project" you can watch in the upper right corner as it trips through all the files as it goes through start-up, but then nothing happens. The welcome screen stays on, but nothing further happens. It doesn't freeze the computer. I am able to close the welcome screen.
Sometimes version 8's Welcome Screen doesn't take the first time and you must launch it twice to get the program to open.
But, if it's not opening at all, it could be a problem with your activation, per the FAQs to the right of the forum.