Many of these pocket camcorders use proprietary codecs are otherwise do not interface well with third-party video editing programs. Many have reported problems trying to edit video from this camcorder in Premiere Elements.
These pocket camcorders are designed pretty much to shoot and post to YouTube. They're not really production camcorders.
You may find it's best to do your editing with the software provided with the camcorder.
My camcorder (Canon Legria HF R16) shoots AVCHD (1920*1080i, 50fields/sec) and it plays "jerky" at the organizer as well as the preview. I do NOT mind this: when I finish editing at PRE9, the output (Full HD H.264 MPEG4) is of high-quality.
Did you try creating something with PRE9 to see how the output looks? Is it of good quality?
Jerky playback in PE is almost always because you have not rendered the area where the jerk is. - or else you dont have a fast enough computer or enough RAM or have everything on one computer hard disk.
If you have a horizontal red line above any of your video in the time ine it means you dont have it rendered. It is caused every time you insert a transition or effect or if your original meaterial doesnt match the original project settings when you imported the video.
You dont have to render the whole project if there are only parts with a red line - just adjust the work space pointers to cover the red line and render that.
There are numerous posts in this forum about it and the way to cure it