Your problems don't likely have anything to do with both programs being on your computer. They generally don't interfere with each other.
But go to Windows Update and manually check to see that you have all -- even the non-critical -- updates. And then go to Apple.com and ensure you have the latest version of Quicktime.
I installed the new version of quicktime and also all new windows updates. Same problem occurs. I also reinstalled PE 8 and the same thing happens. I really don't understand why I can't open up a new or old project at this point. I even tried using different presets thinking that might it, but evidently that's not it either. At this point I'm considering buying a .mts converter just so I can use PE 4 instead.
You might already know - Premiere elements project file has an extension .prel and any other project file will not open in Pre, and trying to open such files might throw the error you are getting.
You can try clearing the local preferences from the Application Data folder and relaunching the app.