I just played around with the new project settings, Something strange is going on. I place the settings at
HD 1080i 5.1 Channle and the project settigns now are HD 1080i.
Going back to the original Project, when you selected the Share settings, what did you choose in the Multiplexing tab?
With most Share options, one has three things that they must do to get a muxed file, i.e. combined Audio and Video streams: Select Export/Share Video, Export/Share Audio and then Multiplexing set to another setting besides "None." All three of those must be set.
Now, with your Project Settings, what are the full specs. of your source footage? That will determine your Project Preset, as they must match.
What version of PrE do you have?
One can alter Project settings, once the Project has been started, but it involves hacking the PREL (Project) file, and it's almost always better to start the Project with the proper settings.
Also, do make sure when you begin your Premiere Elements project that you set it up with the correct project settings.
The HDV preset you are using is for tape-based hi-definition video captured over a FireWire connection.
Is that where your video is coming from?
If it's from another kind of camcorder -- particularly if it's from an AVCHD hard drive camcorder shooting in 5.1 audio -- this could explain your problem.