Your camcorder is an AVCHD camcorder. You add the video to your project by using Premiere Elements Get Media, from AVCHD
and downloading it over a USB connection to your computer.
It's very important that you make sure that your project us using the correct project settings for your camcorder! These settings can only be made when you first open your project. If you are shooting in 5.1 audio, you must select the AVCHD preset for 5.1 audio or you'll get the strange behavior you're describing.
According to the specs I've found, your cam shoots in 1920x1080. Make sure you choose this preset and not the 1440x1080 preset.
I've created a free 8-part tutorial series for videomaker support site Muvipix.com called Basic Training for Premiere Elements. It's a great introduction to the program for a newby. Part 1 should be particularly interesting to you, since it describes how to select the right project preset for your camcorder.
While you're there, check out the extremely knowledgeable and helpful Community forum as well as the over 1000 tips, tutorials, motion backgrounds, DVD menu templates and licensed music clips -- many of which are free and even more of which are available for a small annual subscription.
Thank you for your help! Finally I am able to add clips to the sceneline without them stacking (yay!!!). However, when I play the clips the video is still 'choppy' but the audio is fine. Any other suggestions?
I have visited Muvipix.com; I need to look closer into one of your books, but I want to be sure first that my camera and this program are compatible.
I have never had PE 7, but if 8 is anything close to its predecessor you may want to make sure your drivers are up to date for your graphics card. That worked for me in PE 8 when I was experiencing the same thing you are. Good luck with that.
As I note in my books, the biggest challenge with editing AVCHD is that it takes a very fast computer to work with it! We usually recommend a quad core processor and 4 gigs of RAM at least.
That said, watch for red lines above your video clips on your timeline. These indicate the need to render your timeline. (Press Enter and the computer will render the timeline and the red lines will turn green.) Rendering your timeline should improve your performance considerably.
However, if after rendering you're still seeing choppy playback, it could be that your computer isn't powerful enough to work with this type of video.