I'm always thrilled to hear someone takes my advice, fish!
I always recommend converting your video to one of the main video formats. For standard def video, I always recommend converting to DV-AVI and for hi-def I recommend converting to 1440x1080 MPEG. Using one of these formats for your source video always works to your advantage.
The program (especially version 9) is capable of working with many different video formats. You just may find you have to render your timeline more often -- which in my opinion is reason enough to convert first!
In version 9, you can work with miniDV, HDV, AVCHD and Flip video without rendering.
VOB always need to be rendered as you're working on them -- so it's up to you whether you consider the boost in performance worth doing it. If you want to use VOB video as our source, make sure you choose the project settings for a Hard Drive Standard Definition camcorder. (This will automatically reverse the interlacing fields for you.) Just remember to render whenever you see red lines above your clips on the timeline.
I can't offer specific advise on MOVs, since Quicktime files (like AVIs) can use any of hundreds of codecs, and each has its own advantages -- and challenges.
So is MPEG Streamclip still the best software? Can you make a suggestion as
to the preset configuration? Compression, frame size, Lowere field first,
Why do some clips have the red line and others don't? Is it that I did not
convert to .avi first? how do I render?
The settings for MPEG Streamclip are detailed in the appendix of my books as well as in the FAQs to the right of this forum.
If you've properly converted your video and you're using a Premiere Elements project preset that matches this video format, there should be no red lines above the clips on your timeline until you add a transition or effect to them.